UBS USES ARTIFICIAL INTELLIGENCE AND TECHNOLOGY TO CATER TO CLIENT NEEDS

▶ Job reductions in wealth management will not be as severe as those in other banking divisions

UBS, the world’s largest wealth manager with more than US$2 trillion of assets under management, is spending hundreds of millions of Swiss francs this year on digital technology and artificial intelligence in a push to cater to customer preference and attract new clients, said Dirk Klee, the chief operating officer for UBS’s wealth management division.

“We’re using digital not just to enhance customer experience but also to streamline and improve the operational efficiency of the bank,” Mr Klee, who is based in Geneva, said in a telephone interview with The National.

“We are still cumbersome in many processes in banking which will be replaced by smart technology and automation. So we’re investing heavily into that.”

The trend towards digitalisation, which includes the use of Blockchain – a technology that secures digital transfers of data and transactions – in finance and cryptocurrencies such as bitcoin, is revolutionising financial services, analysts say.

Together with the use of artificial intelligence, technology is reducing the need for human resources at banks and diminishing their need for branch networks, creating sizeable savings in the long run.

At the same time, such digital innovations have the potential to upend traditional business models such as middlemen in finance that take fees from the transfer of funds, or in asset management where computers instead of humans are increasingly making investment decisions, forcing banks and other financial services to embrace changes.

In an interview on Bloomberg Television, the former Citigroup chief executive Vikram Pandit said banks may shed 30 per cent of their workforces over the next five years because of artificial intelligence and technology advancements.

However, wealth management is one area in banking that is better insulated from the impact of the digital revolution as human advice on investments is still far off from being replaced by robotic decision-making despite the inroads into the industry that artificial intelligence has made.

Mr Klee said that he did not expect anything quite as drastic as a 30 per cent reduction in UBS’s wealth management division, and that while a number of administrative positions would eventually go, they were likely to be replaced by more wealth management officers.

The bank is still opening branches in growth markets like China. But in more mature markets, the number of visits to branches is declining as clients use the telephone, video conferencing and the internet more often.

“We can see that onsite visits of clients globally is reducing because a lot of clients deal with us on the phone, online,” Mr Klee said.

“More and more we are going towards remote access because a lot of clients videoconference us or telephone us and that has an impact on real estate and it also means that we need fewer and fewer physical spaces and we can concentrate things more in hubs.”