By Nicholas Wright, Director Institutional Sales (MENA region) for Saxo Bank.
Wealth management and investment services in the Middle East are going through a tremendous period of transformation and there is now no longer a question mark on whether to digitize businesses in this field. Those companies who fail to digitize will simply not survive as the pendulum has now swung permanently in favour of technology.
Financial technology, or fintech, is a topic close to our heart as for the past 28 years we at Saxo Bank have strived to democratize trading and investment through the utilization of technology. We believe that access to global capital markets should not be the privilege of a select few. Everyone should have the freedom to control their investments and grow their wealth to support their goals.
During this unprecedented time of global lockdowns and limited mobility, the need for technology in wealth management and investing has come into direct focus. Covid-19 has presented many opportunities as investors look to invest in financial markets and trade the volatility surges. The violent swings in the markets mean the traditional methods of wealth management are exposed. Traders are looking for fast, nimble systems for investing that offer them much greater control and transparency.
We have noticed a huge uptick in demand for our services, not only from our direct clients but also from other banks in the region. Regional banks are under pressure to offer more investment products, access to more international markets, additional services, and more asset classes – and these need to be accessed by clients digitally. This trend is not the result of Covid-19, but it has provided the impetus to drive this change through faster.
One of the biggest requests we are observing in the regional banks we are collaborating with is the provision of digital wealth management tools which have the power to recommend investment portfolios matched to each client’s needs, investment goals and risk profile. Thanks to AI and data-led insights, it is now possible for us to provide the personalised service of a private banker at scale, which, in turn, allows banks to better service their customers across all statuses of personal wealth.
What is most clear to us in our work in the region is that if MENA banks want to offer a global service, they need to expand their proposition and invest in technology that delivers a seamless customer journey as well as a truly global offering. The most efficient and effective way to expand the digital offering is to collaborate through external partnerships. Partnerships provide instant technology and market access to service end clients.
Banks can enter into a partnership with Saxo and use our technology and market access to service their end clients. The customer does not care whether the bank builds the product or controls the whole transaction. They care about whether the products and services meet their investment and trading needs.
Another trend we are observing currently is the focus on wealth management products that appeal to the mass affluent market and with a younger, more digitally-savvy profile in addition to the traditional approach of private banking for high net worth (HNW) and ultra-high net worth (UHNW) individuals.
These investors are well suited to digital advisory services and portfolio consultation such as our SaxoSelect managed portfolios offering. SaxoSelect utilises AI technology to make it straightforward for clients to easily choose a portfolio which is aligned with their investment goals and balances their risk profile. They are particularly attractive because of the transparency and control that these portfolios offer to investors – clients can monitor their investments 24 hours a day through our platform and withdraw at any time at no extra cost.
Fintech has enabled this new breed of investor and ushered in a surge in self-directed online trading at all wealth levels. We don’t just think this, our results show it. It is evident in the 150% increase in our MENA client base, and in the addition of 80,000 new active clients globally in the first half of the year.
There is no turning back on the technological advances that empower individuals and give them the freedom of independent wealth management. Banks and financial institutions can capitalise on these trends, but they must understand the need to adapt, evolve, and take action to embrace digital transformation.