Our Sales Director CEE – Stanislaw Markowski has been interviewed by Fintek.pl, about My Wealth and the trends in Wealth Management. The English version of the article can be read below:
In Poland, a generational transfer is underway. Those who amassed their fortunes in the 1990s or early 2000s are gradually passing them to their children and grandchildren. The new generation expects a wholly different – instant, in fact – approach to contacts with wealth managers. To meet these expectations, banks need innovative, fintech AI-based tools. One of these is the My Wealth application developed by Dorsum.
Today we are interviewing Stanisław Markowski, the Dorsum sales director. We will talk about the app itself, partnerships with banks, investment habits of Poles, robo-advising and the increasingly more fashionable chatbots.
Rafał Tomaszewski: Good morning. Let us start with a brief overview. What does your company deal with?
Stanisław Markowski: Dorsum delivers private banking solutions, including applications and systems that allow advisors to work with clients better and clients to use banking services more comfortably while meeting all regulatory and system requirements. Our newest flagship product is the My Wealth application.
R.T.: Is the application available only for mobile devices or also for desktops?
S.M.: Both. We provide our services to banks, brokerage houses and wealth managers who operate advisor networks and offer them solutions accessible from desktops, laptops and mobiles. They also offer their clients Android and iOS based apps.
R.T.: Given the projected economic slowdown, is the wealth management industry on the right tack? Does it make sense at all?
S.M.: Paradoxically, if we study the level of wealth of private individuals before and after the global market crisis, we are in for a surprise, as their affluence grew. A side effect of the crisis was an increase in the amount of financial assets to be managed as a result of cash availability and having a second look at investments. It usually happens that the amount of cash in circulation increases during periods of economic hardship. We are observing this very effect in Poland, as the overliquidity of the financial sector, decrease of private investments and curtailing of credit initiatives produces free cash that needs to be put to use one way or the other.
With low interest rates, clients heap cash and banks note decreased revenue from interest. We need to look for new solutions. Banks tend to move towards offering investments in mutual funds, certificates, shares and bonds and therefore require new applications and client approach methods.
R.T.: So far so good – but how many clients can Dorsum boast? How long have you been in business?
S.M.: The company has been active on the Hungarian market and elsewhere in Central Europe for over two decades. Since a few years, it has been present in Poland, Czech Republic and Slovakia. Our clients are banks, but actually it is advisors and clients who use the services.
R.T.: How can the fintech industry develop with regard to the more affluent clients?
S.M.: I believe the prospects are very good. As far as Poland is concerned, I mean for example the possibility of startup companies contacting the regulatory authority via Innovation Hub, the option of operating in a regulatory sandbox or blockchain greenlighting by one of the largest Polish banks, which shows that the current mood is positive.
In a wider perspective, clients and advisors change. Their age is decreasing, down to the “millennial” generation and beyond, and they prefer entirely different means of communication. My teenage daughters rarely use voice calls now, preferring chats, voice texting or memes. This new approach to communication is what our wealth management clients expect.
We must remember that a generational transfer is underway. Those who amassed their fortunes in the 1990s or early 2000s are gradually passing them to their children and grandchildren and the latter expect an entirely different form of contact. It’s not about setting up an appointment with the advisor next week – that is too long for them. If they ask a question, they need to receive an automated answer immediately. If they want to talk to a human advisor, they can wait until the next day, but not for a week. To make this possible, we need entirely new tools whose introduction requires banks to act in a fintech way.
R.T.: I understand that your application allows clients to bypass the advisor and rely on a chatbot’s automated answers?
S.M.: Exactly. We prefer a hybrid advisory model which is different from typical robo-advising. We want to preserve the “human” relationship between advisors and clients, but also support them with digital devices and applications.
Our new My Wealth app allows an automated conversation with a bot who can be asked simple but importation questions, for example about account balance, cash inflows or simple investments. The app can also be used to redirect the chat to an advisor, who can reply immediately or in an hour or two, if they are not available.
R.T.: Are there appropriate regulations for the Polish robo-advising market? How does it look legally?
S.M.: I have never seen regulatory authorities lay down any conditions for robo-advising, therefore providing it is not limited in any way. Regulatory authorities deal for example with security, which is exactly what robo-advising offers clients. It is felt that an algorithmically generated advice will be impartial, and this is often the case.
R.T.: Also, chatbots never lose patience or get carried away, do they?
S.M.: Yes – in contrast, humans may be having a bad day, be tired or distracted. Interestingly, however, chatbots must be programmed to recognize that a client may stop the conversation and ask for a joke, and this does in fact happen. To maintain the conversational flow, the bot should be able to tell the joke, provided that it matches the client’s sense of humour. Besides, the bot must remember previous conversational topics and recall them.
R.T.: Some time ago, I have found an interesting article in a UK paper which discussed the use of chatbots. The article suggested that many companies only pretended to use robo-advising but still put humans behind the screen.
S.M.: Yes, and a great deal of honesty is necessary here. We need to make the client aware of whether they are talking to a human or bot, and that their chatbot conversations are monitored by operators to improve or stimulate their flow for more complex topics. Everything must be in line with principles of the art and GDRP. It should be added that people prefer to talk to bots using text. Having a voice conversation makes many clients feel uncomfortable.
R.T.: Yes, I guess this could be discomfiting, especially for those who are not regular users of new technologies. From your point of view, is the Polish fintech market really as advanced as commonly believed?
S.M.: This is a very interesting question that deals with a complex issue. On one hand, we see Polish banks that often act like fintechs and are all for innovation.
The largest banks in Poland start to act like developers and build their own apps. Usually, they are not burdened with old systems as is the case in Western Europe, but can afford to build from the ground up. And Polish IT architects are among the best in the world.
On the other, Polish fintechs are absent from other markets. I wonder why so few Polish companies are able to navigate the markets in countries like Lithuania, Slovakia or Hungary.
R.T.: Perhaps it is the size of our market that hinders our fintechs? Because our market is large, fintechs plan to expand locally first and foremost to win a position. They are not meant to conquer foreign markets.
S.M.: This is true. Poland is a huge market and sticking to it gives enough growth opportunities. Going back to economic slowdown, this is the factor that might persuade banks to use different sales channels and move abroad, for example to the there Baltic countries with their small, but tightly integrated markets. Their banking sector is strongly dependent on Scandinavian parent companies that employ very deliberate operation methods and provide consistent support. There is enough gold to dig up there.
R.T.: Let us go back to Polish clients, however. Do Poles know to manage their wealth?
S.M.: Poles have extensive experience and have been through a lot. When it comes to investing, generational memory is considerable, but then there are technology issues that force new solutions. We are still observing that the appetite for investments here is much weaker that for deposits even compared to Czech Republic or Slovakia.
Deposit comparators rank as some of the most popular websites, showing that large reserves still exist. It would be worthwhile to show Poles that if they invest they can earn even more. For the younger generation the opportunity comes in the form of mobile or internet advisory services. Giving them an investment game that demonstrates what can happen to their money during economic upturns and crashes, followed by a properly profiled offer, can have very positive effects and quicken the investment pace.
There is also a lot of room for the so-called Big Tech companies. A client accustomed to online purchases and trusting a site will be willing to click that “Investments” tab. If sites can help with purchasing decisions, why would they do the same for investments?
R.T.: Are Poles afraid to use new solutions?
S.M.: Definitely not. There is no mental barrier. E-commerce companies should take advantages of this. An example may be Amazon, with Jeff Bezos himself mentioning such plans.
R.T.: How do banks react to all this? What will large financial institutions do when Big Techs turn their eyes to the banking sector?
S.M.: Here we go back to regulations. Since the 2008 financial crisis, banks have strongly focused on meeting regulatory criteria. Even when it comes to innovations, they have to deal with regulations first.
Fintechs or Big Techs that enter the financial market will obviously have to face these too. Yet they lack sufficient experience and, consequently, a suitable history. Hence, they can approach this issue in a more adaptable way, with both positive and negative results. Banks can either partner with companies like Google or Amazon, or be forced to act more flexibly.
R.T.: Is your My Wealth app meeting with a lot of competition on the market?
S.M.: We may potentially be facing some heavy competition, mostly from bank IT departments. However, we have not yet seen many universal wealth management platforms in Poland, but also in the Czech Republic of Slovakia, that would give a 360 degree view of client data.
While such solutions are being developed, they are not yet fully available. Likewise, while mobile applications can be used to transfer money or purchase mutual fund units, they do not provide a full cross-sectional profitability analysis, the ability to see the portfolio in various currencies or the opportunity to talk to an advisor or bot. I believe that much remains to be done here.
R.T.: Is your app to be used only by advisors?
S.M.: No – clients, and I mean here individuals interested in investing, can use it too. Advisors have slightly different needs, such as access to client data, the investment system or generating offers.
Clients, on the other hand, need access to operations made by the advisor (albeit in a slightly different form) and the ability to make instant transactions when the advisor suggests a suitable offer. Our app allows different views of the same data for both advisors and clients.
R.T.: Have you already partnered with banks active in Poland?
S.M.: Yes, we have already signed an agreement with Raffeisen Bank International to service five banks in the region, including in Poland, Hungary, Slovakia, Czech Republic and Romania.
R.T.: Is the My Wealth app free for clients and advisors?
S.M.: The application itself is provided by the bank, but the actual cost depends on the level of complexity, the number of systems to connect to and the client pool to be serviced. Most often, the bank pays a fee depending on the number of end users (clients) to whom the app is made available; the costs of service are spread over a period from one to five years.
R.T.: To sidetrack slightly, Brexit is just around the corner. How might the UK leaving the EU affect the fintech industry, especially considering London’s place on fintech’s global map?
S.M.: The UK is a market that, whatever happens, will stay afloat on the global scale. The level of trust placed by clients in banks, by banks in technology and by regulatory authorities in the market is a huge capital there. If no Brexit agreement is signed, passporting might become an issue. UK-regulated fintechs might be hindered from accessing the continental market and vice versa.
I believe however that the positive aspects of the UK market will help its companies perform well regardless. Even if applying for licenses turns out to be necessary, client expectations and habits will remain unchanged. As far as regulations are concerned, they are incorporated into the UK legal system due to Brexit. For that reason, moving solutions between countries should be easy, at least at first, before potential divergences appear.
R.T.: Keeping to the UK, I cannot but ask about Revolut. Do you treat the newly appearing commission-free investment platforms as competitors? We know that Revolut plans such a tool. In the US, on the other hand, there is Robinhood.
S.M.: This holds some potential for us. These things encourage the entire market to innovate. Companies like these can be our partners too. We are also offering infrastructure for entities offering to connect clients with suppliers.
R.T.: What are your plans for the future? What does it hold in store for Dorsum?
S.M.: We are strongly focused on mobile apps. They are used by both advisors and clients. We work to make our apps transparent, intuitive and reliable, but also on gamification, to make the UI resemble something the clients have seen in games or holiday/flight ticket purchases. We are strongly committed to being “mobile first.”
R.T.: Is the PSD2 directive heavily impacting your business and your plans for the future?
S.M.: We are looking forward to the directive’s next stage which presupposes the integration of investment services. Right now, it’s all about payments.
In this respect, we can help banks gain a transparent view of their client accounts and cash flows between them. The next step is to check where the clients are investing – with their consent, of course.
R.T.: Thank you for the interview.
S.M.: Thank you.
Stanisław Markowski was interviewed by Rafał Tomaszewski.