For UBS, size is key to opening Riches vaults that are digital


For UBS, size is key to opening digital wealth vaults

UBS SmartWealth targets clients whose wealth begins in the tens of thousands of dollars, whereas the resources of traditional banking clients can stretch to more than $1 billion.

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Released at Wed, 27 Sep 2017 15:18:18 +0000
Juerg Zeltner, the head of UBS’s wealth management division, told Reuters on Wednesday he was “very happy with the offering” but that scale was crucial for the model to be a success.

These are part of efforts to improve performance during its main wealth management division, which was the source of almost half the bank’s pre-tax income last year but has been hampered by interest rates in Switzerland and the euro zone.

Digital wealth managers are dwarfed by banks such as UBS, which manages more than $2 trillion in client assets.

Reporting from Joshua Franklin; editing by Alexander Smith

One way is to benefit from the money on offer with lending, although Zeltner said UBS has no plans to do so.

“We’ve defined our risk appetite,” Zeltner said. “I know how much earnings I’m ready to put at risk and that limits my exposure to how much lending I’m going to do.”
However, of building an investment portfolio based on a customer’s risk appetite, their lower-cost version is regarded as a threat to the traditional advisory version of banking.
The Swiss bank started piloting SmartWealth in Britain as a platform to rival start-ups like WealthFront in the United States and British venture Nutmeg.

“This is a big learning … the real question is how do you scale it to more?” Zeltner said.


UBS, which hasn’t said where it will roll out the product next, has seen a lag before clients start using the platform to make investments, Zeltner said.

Now it requires to work out how.
One route for UBS to scale up SmartWealth is the bank’s One Wealth Management Platform, where Zeltner expects more than 85 percent of its assets will be by the year’s end.
Negative interest rates have proved difficult with clients keeping bigger cash positions .