London calling as private banks connect with the future

For private banks, the big business base of London’s Canary Wharf and smaller-scale tech hub around Shoreditch, both on the city’s eastern side, are fast becoming targets. But this is not yet a two-way love affair. 

PWM frequently speaks to Fintech founders, such as the delightful plimsolled eccentrics meeting suited private equity angels at the Google Campus. Despite their love of the coffee shops in the shadows of Hoxton’s Silicon Roundabout, many of these serial start-ups voice legitimate gripes about London.

Typically, these relate to banks and their reluctance to back new high-tech ideas. Much needed networking for entrepreneurial families – one of the major requests among private and business customers – is also in its infancy, despite the boasts coming from the global players of Mayfair, St Pauls and Canary Wharf.

The sale of un-needed derivatives and structured products to growing businesses can leave a sour taste, rather than concentrating on the expertise that clients really require. Some of this will centre around speciality in currencies, especially where a start-up’s London HQ can outsource production and administration to Eastern Europe and South East Asia, where costs are lower and currencies can fluctuate wildly.

But many banks are at last drawing up serious offers for this new entrepreneurial class, realising the ideas they offer will shape the future of private banking. Not only will it provide a new, growing stable of assets, more dynamic and resilient than the old money of yesterday’s aristocrats. But it will also present investment ideas to the banks which can be incubated for the benefit of fellow clients. 

Citi’s innovation labs, for instance, currently active in Tel Aviv, Dublin and California, are dedicated to partnering with technology start-ups, with the solutions developed often tested and commercialised with the bank’s support. These solutions can include the introduction of new technology in the form of fast-developing apps to a still backward wealth management industry. Banks must make sure they are monitoring all of their units to foster this cross-fertilisation.

Entrepreneurs are generally highly attuned to digital media and expect platforms that support timely analytics to make informed decisions, according to HSBC Private Bank. These fast-moving families are driving much of this technological development.

HSBC is keen to bring together like minded trend-setters in its Family Enterprise Forum and Next Generation events, to hear from experts about how to transition and protect their wealth. Pictet, a Swiss bank increasingly focusing on the London business community, has been a leader in networking events with its Founders Forum, Tech Tour and DLD summits.

Entrepreneurs, say the banks, are now assessing capabilities and selecting institutions that provide a compelling value proposition in the same way they would expect investors to evaluate and invest in their ideas.

According to Pictet, entrepreneurs typically have their risk tied up in their businesses and are looking for stability and wealth preservation when choosing a wealth manager. As many are young, they are prepared to work to long time horizons.

French player Société Générale, which has also been deploying increasing resources in London, is seeing heightened business activity there, and spending much time in discussion with this new class of clients. 

Some of this is spent educating them to expect a much lower rate of return from their portfolios than they can reap from business ventures. German private banking stalwarts Berenberg are stepping up their presence in London too. 

These European banks have seen the rigid rules in place at home and prefer the enlightened attitudes they see in London. They know that a flexible immigration and employment policy, allowing migrants from the developing markets of Europe and Asia to work in London’s creative Fintech hubs, remains a non-starter in Paris or Frankfurt.