Flexibile solutions for an evolving industry

PWM: The market in Islamic products and investment strategies is being targeted by Middle Eastern, Asian and international institutions. How does the recently founded BLME differentiate its client offer and business model from its growing number of competitors in this space? BLME: From a business point of view, BLME differentiates itself by the range of the products it offers its clients and the personalised service we offer each customer. We don’t believe in the one-size-fits-all approach, which is often the case with bankers in the wealth management sector. Islamic products are continually evolving to meet the changing demands of the market and clients. BLME places great importance in working with our clients to create products and services that are fair, transparent, flexible and competitive enough to suit their needs over the long-term. One of the key anchors of BLME’s strategy is the technology we have invested in. Our private and wealth management banking solution, Oracle Flexcube, is a comprehensive tool that provides a single platform to plan, record, track and manage the wealth of a customer across a range of asset classes and instruments. These include equity, sukuk, mutual funds, structured products, real estate, collectibles such as art, and deposits. We believe that we not only have a compelling value proposition for our customers today, but we’re also geared for the future. PWM: In terms of making the client experience as smooth and painless as possible, what were the key qualities which BLME was searching for in a partner, which could provide technological and other support services? BLME: Technology really underpins our entire business strategy. Therefore, we extensively and carefully evaluated the products and vendors in the market. We looked specifically for open architecture and a flexible integration framework which satisfies Sharia requirements, ease of use and an intuitive user interface with a platform that would help us support current and future business opportunities. It was also important for us that our chosen supplier has the capability and track record to continually invest in enhancing the product to meet evolving needs of the market and has the ability and experience to mitigate risk, while increasing process efficiency and reducing technology and operational costs PWM: Can a robust technological platform actually improve and preserve a the investment performance of an account held by a client and their family by monitoring allocation decisions, trade orders and transaction prices so that a mandate’s terms are strictly adhered to? BLME: Oracle Flexcube, the system we have chosen, allows customers to link their accounts to that of their family. This allows clients to not only track their own wealth but that of the family or household as a whole. This means we can compute family net worth and undertake accurate portfolio analysis and performance measurements in granular as well as consolidated terms. We think it is this kind of information that is attractive to customers. Moreover, portfolios can also be analysed based on their composition across different dimensions like instrument type, instrument group, asset class, region, currency, industry and market capitalisation. In our experience, a robust technology definitely improves performance by providing us and our clients insights in a timely manner. PWM: Many wealth managers have been accused of taking undue risk and indulging in speculation with their clients’ assets. What sort of safeguards does this solution offer to prevent customers’ assets being mistreated in this way? BLME: Sharia compliance is the strongest of the safeguards, with a robust and transparent risk management framework supported by a Sharia Supervisory Board which acts as an additional layer of corporate governance. Systems are definitely of a key importance. Oracle Flexcube provides us with the flexibility to define a risk profiling methodology that is suitable to our needs. We have been able to maintain a questionnaire and scoring system that helps us explore various aspects of our clients’ needs, risk profile and investments in an objective manner. Based on customer responses, we attribute risk scores automatically and assign the customer with an appropriate risk category. This risk classification then drives the model asset-allocation recommendation. We can also define the frequency for reviewing the risk profiling of different client segments so that we continually re-assess the client’s needs. PWM: Where reporting is concerned, how have BLME and Oracle decided how much information clients actually need to supervise their portfolio and what depth of analysis should be available to the client? Does this differ according to which customer segment the client is located within? BLME: Given the social context and lifestyle of affluent and high net worth clients, an information overload could be counter-productive to the relationship. On a relationship basis, we’re able to individually tailor the information that we pass on to clients as alerts or periodic communications. Apart from the intuitive drilldown of information from a high level summary to increasing level of details, the system also has summary and detailed customer portfolio reports showing both the portfolio holdings as well as the analytics. PWM: Are there elements within your checklist of needs which are specific to Islamic private banking, or do you feel that wealthy clients have the same needs across the board? BLME: We do believe the needs of our clients, some of whom bank with BLME so that they are able to follow Sharia-compliant financial and investment principles, can be different from the needs of conventional high-net worth individuals. But, in essence, the needs of clients are the same across the board, be it on the issue of trust, transparency, or financial security. PWM: During the financial crisis, many private banks increased the frequency of contact and changed the model of interaction with customers. Which type of model does the Flexcube solution best support? BLME: Oracle Flexcube is a flexible system. It’s really up to a bank to adopt a client interaction model based on the needs of its clients. Our relationship managers are able to manage clients by maintaining and tracking customer interactions, transactions, appointments and pending tasks. We believe in a collaborative approach to decision making. Therefore, we feel online messaging and user defined events and time driven alerts are particularly useful when building a solid, trustworthy partnership with our clients. In a typical wealth management scenario, one needs to periodically review and adjust the client’s asset allocation. Flexcube private banking, allows customers to provide feedback through questionnaires and, ultimately, recommend asset allocation. This can also be done in the form of a financial planning exercise. Again this can be done based on the customer segment.