A robo-adviser service without face-to-face meetings with client representatives isn't going to work in the business of private banking, says Luc Schuurmans of Bank Linth. In an interview with finews.ch, he explains the solution preferred by his institute.

 Mister Schuurmans, the launch of a robo-adviser at a regional bank is pretty far-fetched as a business concept, wouldn't you say?

At first sight perhaps. But if you compare with other industries, it isn't. Remember, the first electric cars were the were sneered at – today they are part of everyday life. Launching Bank Linth Invest made good sense.

What were the reasons behind the launch?

First of all, as a regional institute and also thanks to the cooperation with our majority shareholder Liechtensteinische Landesbank (LLB) we are able to implement innovative solutions quickly. Second, earlier or later all banks with an asset management arm will use digital solutions in its advisory procedure. And third, demands regarding the documentation and information in particular from regulators are increasing constantly

Do you have the right customers for this offering?

A pure robo-adviser without any interaction with our investment consultants will indeed be a choice for few customers only. But that's why our solution doesn't stop there: it combines the advantages of robo-advisers, such as the automatic control of risks, with a personal consultancy – a hybrid if you so wish, to remain in the world of motor cars.

«Uncharted Territory»

This is uncharted territory for us. But we are pretty optimistic following the first feedback after the launch.

Potential customers need to invest at least 100,000 francs to be able to use your hybrid offering. Isn't that a lot?

Compare it to a sports car. To fully use all the functions, you need the proper conditions: driving ability, a proper track and a certain flexibility. Which is why we suggest the use of our solution from 100,000 francs upwards.

You offer a mix between a robo adviser and personal consultancy. What exactly does it contain?

To stay with the images from motoring: We offer our customers a car at the highest level of development. Depending on the driving ability and surface we support the customer with the right set up – the tuning of the asset allocation. The customer however at all times keeps the steering wheel in his own hands, because he is making the decisions.

«The customer has the certainty that his assets are surveyed at regular intervals»

He has the certainty that his assets are surveyed at regular intervals, and he receives updates about the status or possible changes via his client adviser or other, digital channels. If he wants, he can ask for support from further experts.

Investments often are complex, which is why we at Bank Linth Invest deemed an attractive visualization important. An example traffic light system applied to the monitoring of risks.

Isn't there a danger that client advisers are degraded to servants of the roboter?

To the contrary: the demands on our client advisers are rising because of the high flexibility of the solution. The strategy suggested by the roboter is based on two dimensions primarily: on the expected return and the comprehensive risk optimization.

«Electric windows and side airbags used to be trendy features.»

The vast variety of the investments, multiplied by individual preferences of customers and their demands, make the selection process complex and demanding. The experience and consultancy of our client advisers are complementing the performance of the computer.

Where did you take the know-how for the digital offering?

We receive our IT solutions from LLB. It puts significant weight on innovative digital solutions within the framework of its strategic orientation. LLB had the lead in the development of the digital investment solutions. It launched its own advisory solution simultaneously – LLB Invest.

What makes you sure that digital banking isn't a passing fad?

Let's look at other industries: electric windows and side airbags used to be a trendy feature, today they are part and parcel of any car. Digital banking is not new. But the digitization in asset allocation only took off a few years ago in Switzerland.

The development takes time and the increased interest by the market stems from the fact that regulations and the planned introduction of Fidleg makes digital solutions a must for all banks.

Robo-advisers in digital banking is a contentious issue. As a regional bank, shouldn't you rather have opted for a digital service in retail banking?

A pure robo-advisory solution without human advice in private banking will remain a niche product. In retail banking however the demand will remain too marginal in coming years to be able to speak about a broadly based service.

Luc Schuurmans is in charge of private banking at LLB-unit Bank Linth, taking the position in 2011. Before taking a job at Linth, he was CEO of Sherpa Outdoor. From 2002 to 2009, Schuurmans was in charge of the Basel branch of BNP Paribas (Suisse) private banking.