Yesterday, Indosuez Wealth Management confirmed that it has reached an agreement to buy Crédit Industriel et Commercial’s (CIC) private banking activities in Asia. As evidenced by recent acquisitions in the region, private banking mergers nowadays involve not only a marriage of two firms, but also a fusion of their respective technology systems.
Asian Private Banker examines the intricacies of the deal between the two French banks from a tech integration perspective.
Indosuez Wealth Management, which currently uses parent company Crédit Agricole Private Banking Services’ proprietary core banking system in Asia, S2i, will most likely retain this platform rather than adopting CIC Private Banking’s Avaloq Banking Suite.
While one Singapore-based private banking COO notes that sticking with the group’s in-house platform would bring obvious cost-saving benefits, other industry experts caution that the integration process will not be straightforward, particularly in light of UBP’s Coutts acquisition, which also involved a migration from Avaloq to S2i.
“This decision led to a complicated transferral of data between two completely different front-to-end banking systems,” says an integration advisor based in Singapore, referring to the UBP-Coutts deal.
Naturally, it is not unusual for the acquiring bank to hold on to its existing system(s), but taking over a firm that has a fundamentally different core operating system means the integration process typically becomes drawn out and costly, according to Yves Roesti, partner and managing director at advisory firm Synpulse.
“The data migration can certainly be simplified if both banks are using the same systems as the data is structured and formatted in the same way,” he notes. “This leads to cost and time savings during the integration project.”
Gap analysis reveals Indosuez better aligned to CIC than VP Bank
Most importantly, it will be interesting to see whether CIC Private Banking’s platform complements Indosuez Wealth Management’s by offering functionalities that the acquiring bank has been missing, the industry experts say.
“Data migrations are largely fixed costs so the size of the two banks is less important than the product mapping and gap analysis between the two platforms,” the COO notes.
The integration advisor says that when VP Bank was tipped to be in the running for CIC’s private banking operations in Hong Kong and Singapore, a gap analysis was carried out between the two platforms.
“It turned out that there may have been bigger gaps between VP Bank and CIC PB’s platform than between Indosuez Wealth Management and CIC PB,” he notes.
Mobile migration
In February, Indosuez Wealth Management launched a new app called “Indosuez Insights”, which provides clients with access to the bank’s latest economic and financial research.
Arjan de Boer, the French bank’s head of markets and investment solutions for Hong Kong and Singapore, told Asian Private Banker that the tech developments are helping the lender to generate greater client interest and attract new talent.
However, some question why the bank did not wait until it completes its integration with CIC before rolling out the app to existing and new clients. While not planned, this worked for LGT when it closed the ABN AMRO private banking deal in Hong Kong and Singapore in May. Indeed, in addition to transferring US$20 billion in AUM and some 200 front-office staff, the Liechtensteinian bank also managed to roll out its client-facing app, Smart Banking, on 1 May.
LGT’s Asia CEO, Henri Leimer, told Asian Private Banker that while the private bank worked on the app for over a year and the timing was a coincidence, “this helped us to onboard our new clients on the app after their assets were transferred”.
Indosuez Wealth Management’s CIC deal is expected to be closed by the end of this year, subject to regulatory approvals, according to a statement from the bank yesterday. “Both parties are committed to ensuring a smooth transition for colleagues, clients and partners,” the bank stated.
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