Nitin Jain, MD & CEO, Edelweiss Wealth Management shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, business performance, investments, regulations, and technology.
Industry Trends | In what ways has the COVID-19 pandemic irrevocably changed the private banking industry and your own bank’s approach to operations and service?
Though 2020 was a year of crisis, in many ways it was also a catalyst for transformation – be it the way we do business or how we manage our day to day lives. We could have never imagined a world where we are able to engage with our clients so meaningfully over the digital platform. Interestingly enough, we have been able to add net new money, onboard new clients, and were able to execute significantly large transactions without having to meet the client physically — which before COVID-19 was unheard of. Even our NPS score has gone up in the last year, which has added to our delight.
Industry Trends | Few can deny the importance of Asia’s onshore wealth markets — in terms of asset pools and the need for wealth management from increasingly sophisticated domestic investors. What opportunities do these markets bring to your business, and to what extent will ‘onshoring’ shape your strategic agenda?
The Indian wealth management industry is largely an onshore business due to capital account convertibility restrictions.
Indians have historically been big investors in traditional asset classes like real estate and gold, and it is only now they are beginning to understand the value of asset allocation and diversification.
Alternatives as an asset class are beginning to emerge, and Indian investors – both institutional and individuals who have had very limited exposure to the private markets – are beginning to take interest.
Business Performance | NNA gathering and account opening have proven challenging in a pandemic-affected world. If we continue to experience lockdowns and travel restrictions in 2021, how can private banking businesses adapt?
The pandemic indeed has presented its own set of challenges, but surprisingly for us, it has not been that bad. Within the first few weeks of the lockdown we were able to adapt to the new normal and enable 100% of our employees to work from home. Clients have been very responsive, and we have engaged with them probably better than ever. Our net new money added in 2020 would be similar or better than in 2019
While the new normal may be different from the earlier way of doing things, we think of it as an opportunity to change. For example, I would not be surprised if, in the future, advisors would be able to engage with more clients, thanks to the time they save from less travel and the efficient use of technology.
Investments | From a portfolio perspective, how important will (a) Chinese assets and (b) alternative investments be for delivering clients’ objectives over the next five years?
With regards to the latter, and s mentioned earlier, Indian investors — both individuals and institutions — have had limited exposure to alternative assets. The industry is evolving, and we believe that alternatives will be the next big thing. Regulations have evolved and have become quite favourable.
In the last few years, as interest rates have fallen and returns from traditional asset classes have been questionable on a risk adjusted basis, people have started to look at alternatives favourably.
Clients have shown distinct preference for yield oriented funds like InvITs and REITs of late. Select hedge funds and private equity funds have also gathered momentum and we see this trend gaining momentum.
Investments | What key investment themes shape your bank’s 2021 outlook — and why?
i) Increasing allocation to alternatives: with the low interest rate regime and the focus on diversification, India alternatives are taking off in a major way – whether private equity funds, private debt funds, or hedge funds. This will be an important theme for the next decade as clients are looking at opportunities in this space.
ii) Diversification into dollar assets: slowly and steadily, Indian clients are becoming more aware of the need to move away from single currency assets, and have started to evaluate opportunities across the globe.
iii) Focus on risk & volatility management: the events of last six to nine months have highlighted once again the importance of risk management in portfolios. Increasingly clients have started to value advice and solutions focused not only on returns but also on risk.
Investments | What important steps did your bank take to drive the sustainable investing agenda and to increase access to sustainable investing opportunities in 2020?
Over the last few years, we are starting to see more ESG awareness amongst our clients. We feel that this shift is structural, we have been very committed to this, and hence would like to be at the forefront of this agenda.
We launched an infrastructure fund which is completely ESG compliant and invests in roads, transmission, and the renewable energy space. This was the first of its kind in India and was very well accepted by our clients. We have provided our clients with access to ESG funds from our other partners who excel in ESG.
In addition, Edelweiss runs a foundation which continues to support philanthropic activities across India. We have been advising and partnering with our clients to participate in this philanthropic agenda.
Technology | Where do you see the best application of data analytics/machine learning in private banking?
We think this is a critical capability which all banks will have to build as they try and differentiate themselves in the marketplace. There are two places where we use data analytics/machine learning in our business.
1) Investment management: our investment decisions are powered by a combinations of human intellect and judgement in addition to automated trading and algorithms led by AI/ML
2) Client analytics: for understanding the preferences of our customers based on their digital footprint and presenting them with the most appropriate and timely advice/solutions
Technology | How is your bank optimising the utility of the relevant digital tools to prepare frontline staff for client engagement in a post-pandemic environment?
The world has evolved to a situation where our RMs now have their entire “office in their laptop”. Everything they need, starting from portfolio advisory capability, to understanding details of a product, to interacting with the team members sitting across the country, to dealing with customers, to tracking performance of their portfolios, and getting new ideas, is now digitally enabled for our advisors. Ths is core to our business and the idea is to empower them in such a way that it allows them to add more value for the customer and be more productive, without having to spend as much time in the office.
Meet 2020’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2020.