Régis Burger, Head of Middle East & Africa at Julius Baer, spoke to Gulf News on why the Swiss wealth manager views the UAE as a core growth market and how it is all set to enter the next phase of its growth journey in the region. Below are excerpts from the interview:
Julius Baer has been expanding significantly in Dubai as well as the region. How has the decision to establish a presence in Dubai paid off?
Given its potential, the Middle East and Africa always represented important growth markets for Julius Baer and are today key pillars in our long-term strategy. The bank established its presence in the Middle East in 2004 with an office in the Dubai International Financial Centre (DIFC). The strategic decision at that time was to further expand our international footprint to be closer to our clients and to capture the wealth creation in the region by being positioned halfway between the two key financial centres of Switzerland and Singapore.
Julius Baer is proud to be the first international private bank to receive a licence to operate in the DIFC. Such a strategic move played a significant role in demonstrating our “pioneering” mindset and in strengthening our long-term commitment to Dubai, to the country and to the region. Dubai as a hub also allowed us to better serve our clients across the Middle East, Africa, the Indian subcontinent and Eastern Europe.
In addition, our presence in the region via offices in Abu Dhabi, Beirut, Johannesburg and Manama has contributed to the ambitious growth strategy of the bank and we see this trend continuing.
We have also managed to strengthen our positioning in Dubai by engaging with the regional art community via our partnership with Art Dubai over the past five years. Our brand presence through our extensive advertising campaign at the Dubai airport have also contributed to increased awareness of our value proposition.
You have just announced your move to the newly opened ICD Brookfield Place in the DIFC. How would you put this in the context to your future plans in the region?
Over the past 16 years, we have grown significantly to more than 160 employees today spanning over 28 nationalities. As we look forward to the next decade of our journey in the DIFC focusing on growth and expansion, it was important for us to provide a collaborative and contemporary workspace for our employees with state-of-the-art facilities.
As sustainability and responsible investing become an important priority for Julius Baer, we are delighted to be associated with a development that matches our own resolve towards being environmentally conscious. The relocation to bigger premises, especially during the pandemic when demand for office space has reduced globally, is a clear message that we are here for the long term and we are committed to our clients and to the DIFC.
During 2020, we were still able to grow despite the impact of the Covid-19 pandemic on the global economy and the financial markets. The current circumstances have given us even more impetus to connect with our clients and support them in their wealth journey by taking into account what truly matters to them.
In terms of 2021 and beyond, we feel that the region has untapped potential as businesses based here are still family-owned and several are expected to pass down wealth to the new generation in the next 10-20 years. Increasingly, such business owners appreciate the value of expert investment advice.
How has the current scenario impacted investor behaviour and the private banking landscape in general?
Once the initial phase of uncertainty was dealt with and investors accepted what we call the new normal, I think one of the main topics of discussions that came to the forefront was on succession planning and a look at wealth creation and preservation from the next generation’s point of view. Especially in the region, which is largely driven by family-owned companies, putting forth the right corporate governance framework while initiating the wealth transfer process has become an important priority.
In terms of asset allocation, despite the fact that cash ratio shot up markedly, private investors are focusing more on quality and while looking at safe-haven assets, such as US Treasuries and German bonds as well as US dollars, euros and Swiss francs.
We definitely think that the Expo 2020, which will now take place next year will boost investor confidence in the region especially in Dubai. The Expo will also be used as a knowledge platform to bring to the forefront trends in technology and other growth areas.
On the corporate side, the preferred stocks and bonds were from companies that are less cyclically sensitive, such as in the healthcare and food sectors. There was a certain reluctance to chase the crisis winners in the new economy, such as in information technology and communications, whereas biotech and other healthcare-related issuers attracted more interest. Ethical financing and corporate social responsibility are the new orders of the day and the new-age clients (i.e. the next generation) want to diversify from the typical oil and gas companies and have a more tech focus in their investments.
From an operational perspective too, there is also an increased requirement for digital banking platforms. A successful private bank in the future will probably combine a face-to-face approach along with online banking to serve the next generation of clients. Like all other banks, we quickly adapted to this new way of working, especially during the initial lockdown days. As direct interaction was no longer an option, we kept our clients’ engagement going through various online channels, including webcasts on the fluctuating market conditions. Private banking is all about personal relationships and it was important we continue to be an anchor for our clients, not only supporting them during market turbulence but also during the uncertainties we faced as a society and a community.
How is technology playing an important role in serving clients? What investments are Julius Baer making in the tech space to improve the client experience?
The client experience is at the core of our technology investments. Over the past five years, Julius Baer has invested over CHF1 billion (Dh4 billion) in technology and digitalisation. Investments in technology to power human advice will be accelerated and increased by approximately 20 per cent in 2020 and 2021.
Clients’ propensity to use digital channels, particularly to deal with administrative tasks, further increased during the pandemic. We are also investing in new digital touchpoints and processes that connect clients and prospects directly to Julius Baer. The main shift will be from the modernisation of the back end to investment in enhancing client value at the front end through smart investments in data analytics and tool support.
Our ultimate aim is to have a convenient, speedy and paperless on-boarding solution that allows our relationship managers to focus their time on value creation instead of administration.
The Digital Advisory Suite — or DiAS, our robo-assistant — was created in-house to support relationship managers in nurturing their client relationships. DiAS provides a combination of suitability checks with investment proposals and portfolio monitoring. It is an efficient system that navigates regulations, automates administration and helps with investment advice. Digitalisation is here to stay, and Julius Baer will be right in the thick of it.
For investors looking for returns, what asset classes are having traction in current investment climate? Are there any particular sectors that have been pushed to the forefront given the current circumstances?
The buzzword for 2020 has to be digitalisation, spanning from retail consumption to healthcare. In investment terms, the trend towards investing along environmental, social and governance (ESG) criteria is accelerated given the market conditions.
As this is a health crisis, which led to a financial crisis, the healthcare sector immediately stood out as a central area of response to the crisis. The race for a vaccine is one of the fiercest ever in human history. Covid-19 has further accelerated the digital disruption in the healthcare sector with a focus on telemedicine, mobile health and medical technology (medtech).
At the same time, recent progress in terms of medical analysis and treatment has been put to work quite effectively. This is to the benefit of biotech companies in particular.
Outside healthcare, the technology sector also stands out. We also see the rise of online retail, streaming services and video gaming.
The boost in innovation and the change in economic policies in response to the crisis will likely last far beyond the upcoming six months. Ten years from now, we might be looking back and saying that the positive after-effects of this pandemic were a major wave of innovation plus a booming world economy.
For now, let’s wait and watch what the future has in store for us.
What is your outlook on the region’s wealth potential?
We particularly consider the UAE and Saudi Arabia as the most promising markets as they have been boosting efforts to diversify their economies leading to an increase in private wealth.
Once again, Dubai being the hub for Julius Baer in the region, we see potential in the entire Middle East, Africa, the India subcontinent and Eastern Europe. We definitely think that the Expo 2020, which will now take place next year will boost investor confidence in the region especially in Dubai.
The Expo will also be used as a knowledge platform to bring to the forefront trends in technology and other growth areas. From our perspective, we will connect the themes showcased by the Expo to some of our research ideas to support our interaction with our clients.
For more details, please visit the website, www.juliusbaer.com