UBS wealth chief on fintech: ‘We are beyond fighting’

Dirk Klee UBSDirk Klee, UBSUBS

LONDON — The COO of UBS’ Wealth Management arm said banks are committed to working with fintechs rather than seeing them as competition.

Dirk Klee told Business Insider: “The key takeaway is that we as incumbents, we have long moved on to a full collaboration model.”

Klee was speaking to BI at the Economist’s Finance Disrupted event in London last week, which brought together mainstream finance companies with fintech startups looking to reinvent areas of banking and finance with the help of technology.

Klee said: “We are embracing fintechs and actually we believe that there is great innovation. We need to find very smart ways to partner up and improve our existing business model.”

Fintech has exploded around the world since the financial crisis, with a proliferation of startups tackling finance with new digital tools. Startups such as online money transfer service TransferWise initially positioned themselves in opposition to the banks, leading commentators to speculate that the upstarts would “each their lunch.”

But fintechs are increasingly collaborating with banks and other established financial institutions, realising just how difficult and expensive it is to reach scale independently.

Klee said: “We don’t believe in combating fintechs, we are beyond fighting roboadvisors. We believe it’s great innovation that complements the human-led advisory we built our franchise on. It’s the best of fintech coupled with the best of the advisory.”

Roboadvisors are the name given to online wealth managers that often rely on a high level of automation to adjust portfolios. They have become one of the hottest tech trends in finance over the last 18 months, with everyone from Deutsche Bank to BlackRock entering the market.

Despite professing a doctrine of collaboration, UBS chose to build its own roboadvisor product, SmartWealth, in-house rather than partner with a startup.

Klee explained: “We believe the better world is not handing over human-led investment advisory to an algorithm, we want to use all the capabilities and the know-how and the investment expertise that we have, bringing them in a very smart way to our clients. Clients should benefit from all the knowledge and expertise we have and not just get a low-cost algorithm. Most of the robots in the market have a very basic offering.”

SmartWealth is currently being trialled in Europe but Klee believes the biggest opportunity for roboadvisors is in China.

“If you look at wealth management in mature markets, it’s built over more than 100 years of trust in the bank and its expertise,” he said. “That trust takes us a long way. This is why in those mature markets I believe robos could supplement our existing services.

“But you know, in China, they don’t have that history. There’s not an established experience of advisory and investment management. What you can witness there — with e-commerce as an example — is that there is incredible growth because they leap frog. The same could happen in banking. “

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