As stock markets continue on their roller-coaster ride, even investors who profess to be buy-and-hold types have become eager users of mobile technology that allows them to track their portfolios almost on a minute-by-minute basis.
That tendency, apparently, goes double for private banking clients, who investment managers say demand more information than the average investor and are embracing smartphone use at a fast clip.
And yet, for a variety of reasons, wealth managers have been slow to embrace mobile applications for their clients. The reasons cited include concerns about security and a general impression that private banking clients did not want that kind of relationship with their bankers.
That is all changing. The PricewaterhouseCoopers Asia Pacific Private Banking Survey 2011 found that 35 percent of private bankers expected to interact more with their clients through social media in the next two years, and that nearly 50 percent of private banks expected to use mobile technologies over the same period.
“I think banks will have to go that way,” said Nick Pollard, chief executive of RBS Coutts Asia. The venerable British private bank is using YouTube, Twitter and Facebook to reach out to its clients; a smartphone app is in the works.
“It’s less about today’s clients and more about tomorrow’s clients,” he said. “Whether we like it or not, this generation and certainly the next one has no boundaries when it comes to accessing information.”
JPMorgan Chase, Merrill Lynch and UBS are part of a small group of banks that have released smartphone applications to their wealth management customers. The use of the application is often restricted regionally; the JPMorgan and Merrill apps are available only to clients based in the United States, and UBS’s is available only to Swiss clients.
“Private banks have been trailing behind retail banks with this type of offering for consumers, and even when they do offer an app, those have pretty poor functionality,” said Steffen Binder, managing director of MyPrivateBanking, an independent research firm based in Switzerland.
This year, Merrill Lynch introduced mobile applications for Apple and BlackBerry devices for clients of Merrill Lynch Wealth Management and the online discount brokerage service Merrill Edge. The apps allow clients to view their portfolio holdings and account activity; transfer money between linked Merrill Lynch brokerage and Bank of America banking accounts; and trade stocks, mutual funds, exchange-traded funds and options in approved accounts. Clients can also track market news and headlines, and gain access to the bank’s latest research reports.
Buoyed by clients’ positive feedback, the bank now plans to release Android versions in December.
The bank is evaluating how the new technologies “can create value for advisers and the firm while at the same time having prudent supervisory and compliance oversight,” said Paul Fox, head of Merrill Lynch Online Platforms. The bank is now running a limited pilot program with LinkedIn to allow clients to communicate with the bank.
The adoption rate of J.P. Morgan’s iPad and iPhone apps has been rapid, said Stephen Clifford, a managing director at J.P. Morgan Private Bank in New York, responsible for the client experience. The bank made the apps available this year to its high-net-worth and ultrahigh-net-worth U.S. clients — those whose assets are $5 million to $25 million.
“The rate of adoption of our mobile apps has been even faster than the take-up rate of our Internet site when we first rolled that out,” Mr. Clifford said. The bank plans to eventually make the mobile apps available to its clients based outside the United States.
The J.P. Morgan apps let clients view their account balances, transactions and investment positions. They can transfer funds, send wire transfers and pay bills using the application, but they have to go through their client managers to give orders on their investment positions.
Mark Jansen, a financial services partner at PricewaterhouseCoopers Singapore, said private banks had been slow to roll out mobile device technology under the belief that their high-net-worth clients might not be interested. Now, however, many players have recognized the increasing client demand for new communication channels and are addressing it, he added.
“I think you will see over the next 6 to 12 months a number of platforms and applications being launched by private banks to facilitate clients’ interaction with the institution,” Mr. Jansen said. He added that banks would use these platforms to offer services to clients from various wealth segments, including retail.
Mr. Binder, of MyPrivateBanking, said there were still a number of “deficits” in the present generation of banking apps, citing a lack of brokerage and trading features, too little informational content as banks are proving hesitant to open their research libraries to app users, and little integration with social media.
Apps also should have better communication facilities, Mr. Binder said. “There should be a direct link to send messages to your personal adviser or even a possibility to get a call-back or chat with him or her,” he said.
Security features are often basic for apps, making the app potentially risky, while privacy policies are not always transparent. “Both make users uncomfortable, especially clients of private banks,” Mr. Binder said.