Open Banking technologies are reshaping the banking industry, including Wealth Management. LGT’s Markus Werner has recently provided insights into the bank’s plans.
Open Banking isn’t a new trend. It’s about technologies that enable third parties to connect to banking data, such as transaction data or risk data by banks and other financial institutions through application programming interfaces (APIs). Open Banking has enabled the evolution of fintech, as tech providers can now offer third-party apps without collecting all the data from the source by themselves.
A newer trend is Open Wealth. It simplifies open banking solutions for wealth managers to provide more comprehensive services faster and at a lower cost. For Liechtenstein-based banks, many of whom are at the forefront of global wealth management, Open Wealth will become a key trend over the next years. In fact, it already is.
The pandemic has accelerated digital trends
One of Liechtenstein’s banks with an Open Wealth focus is LGT. Markus Werner, Head Intermediary Business at LGT, said in an interview with Finews that several banks, including LGT, have started to “intensively look at Open Wealth.”
Wealth Management has been a core pillar of the bank’s strategy for the last 30 years, including services for asset managers, multi-family offices, fund management companies, trust companies, and law firms.
Digitization in this area has been ongoing for a while, but the pandemic has accelerated the trend. Werner says digital collaboration during that time went extremely well. “We were already using most digital tools, such as MS Teams. Our newly developed online banking for independent asset managers was already fully operational at the pandemic outbreak, which was extremely helpful,” says Werner.
Still, the pandemic has forced the bank to convert processes that previously ran physically to digital solutions more quickly since 2020, following agile principles.
Standardization and Cybersecurity
Werner points to several developments that will become crucial over the next years. One goal is to create standardized interfaces between the bank, the various financial intermediaries, and IT service providers. Via these interfaces, asset managers can obtain and deliver customer data from their bank, process it automatically in their systems, reconcile securities positions electronically, trigger transactions digitally, update customer profiles, and open accounts.
“These standardization efforts will massively reduce development and operating expenses and implementation deadlines for both asset managers and custodian banks,” Werner told Finews.
Another trend is Cybersecurity. Open banking brings new risks, especially in the area of data protection. “For us as a partner to asset managers, the protection of customer data is fundamental,” said Werner.
LGT works together with the OpenWealth Association to increase the possibilities of Open Wealth while also improving security. More products and services are planned. He expects this market to grow fast. “We see this development as a great opportunity for LGT and plan to invest further in improving our offering for our partners,” said Werner.