Most importantly, technology has to be benchmarked against our clients’ needs. We see technology as an enabler and change for the sake of change isn’t always a good thing. Digital solutions are of increasing importance when interacting with our clients and meeting their needs, but the human touch will remain key for our success as a private bank.
Michael Vlahovic is head of Private Banking at EFG Bank UK
Tell us what your company’s mission is, and describe in brief the strategy that implements that mission?
EFG International is a global private banking group offering private banking and asset management services and is headquartered in Zurich. As a leading Swiss private bank EFG has a presence in the major financial centres and growth markets and operates in around 40 locations worldwide. The commitment to being global while maintaining local expertise is a distinguishing feature of EFG. The enhanced presence in Cyprus allows us to expand our reach and maintain greater proximity to our local clients.
An entrepreneurial spirit has shaped the bank since it was established. This has enabled us to keep a solutions-driven approach and to build long-lasting client relationships. We are committed to offering a first-class, superior service to our private banking clients and want to be renowned for our unique client approach. We are passionate about delivering individual and suitable solutions to our clients and have a strong risk management and regulatory compliance framework in place to ensure sustainable long-term growth.
How does technology fit into the strategy?
Our model centres on our relationship with our clients. Hence, we are on a constant quest to find ways to improve our services. The question we always ask ourselves is: “Which technology and why’? Most importantly, technology has to be benchmarked against our clients’ needs. We see technology as an enabler and change for the sake of change isn’t always a good thing. Digital solutions are of increasing importance when interacting with our clients and meeting their needs, but the human touch will remain key for our success as a private bank. There are certain traditional elements that clients will always expect from a private bank like EFG. This is also the feedback we receive from our clients. A personal, individualised touch leads to greater understanding and a better relationship.
What is your philosophy of innovation?
Over the years, we have continuously grown and evolved, transforming ourselves while staying true to our distinctive entrepreneurial spirit and unique Client Relationship Officer model. With this founding mindset, we are hard-wired to initiate and embrace change and innovation. Our ability to adapt was put to the test again when the global coronavirus pandemic suddenly erupted at the start of 2020. We demonstrated operational and financial resilience and were quick to implement new digital solutions and were able to ensure uninterrupted private banking services, while safeguarding the wellbeing of clients and employees. Over the coming months, we will ask our clients which of these ‘crisis driven’ digital services they wish us to stop or which they’d be happy for us to continue with. It’s important that our most important assets, our clients, are part of the innovation process. We constantly request feedback on any new proposition to ensure it improves the client experience and fits with their expectations.
Tell us, in detail, about the innovation itself and how it fits into your strategy?
With more innovative and digital tools at hand, our Client Relationship Officers have more time to dedicate to advising and supporting our clients. The automation and digitalisation of processes for instance allows us to reduce complexity and more effectively customise products and services for our clients.
In addition to having a high-quality management team, companies deemed to be Future Leaders will evidence innovation-driven growth and benefit from adaptive business models and revenue streams. We have already seen many new innovations and automations during the COVID-19 pandemic, many of which are likely to be of relevance going forward as we approach a ‘new and better normal’ around the world.
Tell us how your company will evolve in the future?
Clients are at the heart of everything we do and that will always remain the case. The needs and the focus of the next generation of private banking clients will be different from today, so we are continuously working to further develop our services and offering to meet their expectations and needs in financial matters. Technology and innovation play a big part in this evolvement. We believe that banking and technology will be evermore intertwined in future while the personal contact and access to a dedicated Client Relationship Officer will always remain important. As a bank, it will also be important to meet sustainability criteria not only in our investment processes but also to by allocating capital to sustainable technologies.
The second inflationary force – supply shortages of semiconductors, new cars and building materials, etc. – may also not be long-lasting. Indeed, there are already signs of these shortages being corrected in the US, the advanced economy which has opened up the fastest.
Investment insights from EFG Bank
After one of the worst years for global economic growth in 2020, this year looks set to be one of the best. Indeed, the bounce in activity is greater than many expected just a few months ago. Nevertheless, uncertainties around the economy remain, with inflation currently one of the most prevalent concerns. In the latest Quarterly Market Review for Q3 2021, EFG’s economists investigate the underlying inflation trend.
For the G20 economies in aggregate, real GDP was already above its pre-Covid level in the first quarter of 2021. That recovery was led by China; but South Korea and Australia were also above their pre-Covid levels. While the outlook is certainly rosier than before, one major economic uncertainty for the months ahead relates to inflation. A rebound in inflation has been seen in many economies, notably the US. There are concerns that this may herald the start of a new, more inflationary period for the world economy; but most central banks, as well as many private sector forecasters, see this as temporary. For now, we are probably at a time of ‘peak inflation noise’: discerning the underlying trend is much more difficult than usual.
There are two main concerns relating to the consumer price inflation trend. The first is that it may be pushed up by higher wages. From bar staff in Britain to stevedores in San Francisco, labour shortages are seen around the world. A broad sweep of UK economic history shows that wages, driven higher by labour shortages, have typically risen sharply in the aftermath of pandemics. However, the rise in wages tends to be temporary; and the general trend for several years after the pandemic is for lower, not higher, consumer price inflation. The reason, broadly, is that subdued demand tends to be a more important factor than supply shortages.
That suggests that the second inflationary force – supply shortages of semiconductors, new cars and building materials, etc. – may also not be long-lasting. Indeed, there are already signs of these shortages being corrected in the US, the advanced economy which has opened up the fastest.
The US has been attracting most of the inflation attention given its multi-year highs. It does however seem likely that the headline CPI inflation rate, which rose to 4.9 per cent in May, will come down later in the year. The Fed’s preferred measure of inflation (the core PCE price index) is already lower than that (3.4 per cent) and 5-year forward inflation expectations have scarcely moved, suggesting that markets are not too concerned about longer-term prospects. However, there have been some big swings in bond prices so far this year, partly reflecting the difficulty financial markets have had in ascertaining the inflation outlook.
The price of the benchmark US 30-year Treasury bond fell by 17 per cent between the start of the year and mid-March, before recovering. That meant that on 1 July 2021 30-year yields stood at 2.1 per cent. That is perhaps the soundest endorsement that financial markets could give of the credibility of the Fed’s 2 per cent inflation target in the long-term. On balance, therefore, we tend to be sanguine about inflation prospects, a message which the US bond market also seems to have accepted.
This is just one of the topics discussed in the latest Quarterly Market Review for Q3 2021. To discover more about how economies are faring in individual markets or regions – from Switzerland and the UK to Asia and Latin America – or to delve into a special focus article on financial disruption, you can access the full Quarterly Market Review here.