In this Q&A interview with Amy Lo, Co-Head of Wealth Management APAC and August Hatecke, Co-Head of Wealth Management APAC, UBS Global Wealth Management as they reflect on UBS’ growing wealth management business in Asia, Covid-19 impacts, and how increasing digitalisation must be balanced by the on-going need for the human touch. Humanitarian and market principles are also to the fore in the environmental, social and governance (ESG) agenda discussed at the end.
Question: Q1. What is your company’s market position: What is it doing well & challenges have been surmounted?
Answer 1. UBS’ Global Wealth Management unit is Asia Pacific's (GWM APAC’s) leading wealth manager with US$449 billion in invested assets and about 1,000 client advisors in the region, as of Q2 2020 (figures updated since standalone UBS winning entry in Global Private Bank: A-P category). Our footprint spans across 12 wealth management offices in 10 locations and three trading outlets in China belonging to UBS Securities and serving wealth management clients.
Despite the challenging global conditions induced by Covid-19, we have coped well thanks to our accelerated digital plans and our client-facing human skills, which are as important. UBS’ profit before tax in Q2 2020 increased 71% by US$97 million to US$233m, setting a new quarterly record for GWM APAC. As ever, volatility isn’t always a bad thing. But there are undoubtedly challenges ahead professionally and personally for everyone. We’ve surmounted the challenges so far and will continue to work hard to support our clients and colleagues.
Operating income increased by US$104m to a second quarter record of US$658m, a 19% rise, mainly driven by strong transaction-based income (up 32% year-on-year) and net interest income, reflecting higher deposit revenues and loan growth. In the first half of the year, profits before tax in APAC represented 30% of the whole for GWM, a big rise versus last year. APAC is a growth spot and we are fully committed to the region for future growth.
The Renminbi (RMB) license for UBS China Ltd, extra staff, focus on China’s ‘silicon valley’ aka Qianhai, and the joint venture (JV) in Japan with Sumitomo Mitsui Trust Bank prove it (see details in UBS’ winning entry in the Global Private Bank: A-P category). With our strong onshore presence, sharpened focus in key markets, and global connectivity, we are well-positioned to serve international and domestic clients.
Question: Q2. Covid-19 has hit economies & workers around the world: How has it impacted your company, business & prospects?
A2. The Covid-19 outbreak did not make our business ‘become digital’, it simply accelerated our plans and helped us to take some decisions faster. For instance, we accelerated the launch of UBS Workspace, a new platform that enhances our productivity and mobility, months before its original planned unveiling. So far, in just a few weeks this year, we have migrated almost 4,000 APAC employees onto UBS Workspace. The digital work platform enhances both employee and client experiences, while meeting all regulatory needs.
The increasing adoption of digital usage is evident in the steep climbs in the client engagement rates we have seen over the last eight months in several of our digital offerings. For example:
- Over 50% of UBS equity trades are now executed via our electronic e-banking platform this year (versus single digit usage a few years ago).
- Online trading rose by 4x in the number of transactions over the last eight months.
- Our e-banking client log-in rates per month have almost doubled.
- There has also been an increase in usage for UBS’ Messaging service, especially WhatsApp. The social media client base has grown by almost 70% and the number of messages more than doubled.
- Chief investment Officer (CIO) views are disseminated everyday through our digital channels, with additional CIO live webinars every week. We get thousands of viewers.
- Over 100 virtual client events have been hosted by UBS so far this year.
Our business model remains advisor-centric, but digital will become an increasingly important channel to complement and support our advisors and deliver strong client experiences (CX), However, technology is an enabler helping advisors respond to client needs in an efficient and timely manner. Software cannot replace the human touch. Wealth management (WM) is after all, a people business, and this must never be forgotten. Digital with a human touch is what we want.
Q3. How do you view technology: as a threat or opportunity? What trends excite you & how do you align and integrate tech into your business?
A3. We see opportunities, but as mentioned earlier, we believe the human touch retains essential. Technology is an enabler. Asia is the region where economic growth partners well with high digital affinity and agility. UBS engage our clients to co-create solutions with their feedback and experiences.
We view digitalisation as an integral part of our overall offering. It further deepens our relationship with our clients. It broadens the scope, increases speed, and adds to our comprehensive catalogue of products and services.
Innovation and digitalisation are the key strategic priorities and we invest heavily in those areas. We want to innovate both inside the firm and with external partners to find and integrate the best new technologies. What excites us is that for a number of years we have been collaborating with fintech start-ups to tap their innovative zeal, and interacting with the whole ecosystem of incubators, accelerator projects, and so on. Such partnerships are a win-win as they get investment and scale, while we get to experiment with smart