BNP Paribas puts faith in tech and sustainability

Vincent Lecomte, CEO of BNP Paribas Wealth Management, is more focused than ever on building an essential private bank for future decades. 

As top dog of the French wealth management giant, overseeing 6,800 staff across Europe, Asia and the US, he sees his task as pleasing several different constituencies: clients, investors, staff and civil society. Despite feeling obligated to play a key role in “broadly financing the economy”, he has little doubt where his first loyalties lie. 

“Our number one priority is our clients,” says Mr Lecomte, who recently stepped up to manage the whole wealth management franchise, after several years as co-head, when he was responsible for Asia and international markets without branch networks. He now supervises client assets of more than $450bn, with market-leading positions on French home territory, and in neighbouring Belgium, Italy and Luxembourg.

“In these tough times, our clients expect the bank to support them,” he says, stressing that the Covid-19 pandemic has further emphasised the need for all parts of the group to co-operate. Collaboration with the bank’s Corporate & Investment Banking (CIB) division is a key priority in Mr Lecomte’s mission to improve coverage of large European families.

“By combining all our strengths together, we believe we can move to the next level,” he says. “Our clients see BNP Paribas as one bank. They don’t care whether it’s wealth management, insurance or corporate banking. They just want to bank with a firm able to mobilise all these resources. That is really at the heart of our strategy today.”

True partnership

This marks a changed approach to previous decades, when wealth management was seen as a poor cousin to investment banking. Just 10 years ago, CIB was known for taking the lion’s share of both kudos and revenues, even though private bankers were often managing the relationships.

“It is a true partnership. We are not only a distributor, but a big contributor to global markets activities at the bank…The mindset has really changed,” he insists. “Our core mission as a wealth manager is to serve families and individuals, who are also entrepreneurs.”

Two years ago, the bank launched ambitious expansion plans in Germany, through such a joint initiative between the CIB and wealth management teams.

A similar approach has been adopted in other “domestic markets”, as Mr Lecomte describes those countries bordering France, including Belgium, Italy, Spain and the Netherlands. The latter is highlighted for expansion in 2021, following acquisition of Dutch bank ABN Amro’s Luxembourg unit in 2018..

“We are serving Dutch entrepreneurs and believe we can bring even more to them with our CIB franchise,” believes Mr Lecomte. “Covid accelerates the need for joining all our forces and maximising synergies for the benefit of our clients.”

Looking East

An increasing slice of the bank’s global business is now being generated by Asian clients, responsible for $98bn, equivalent to 23 per cent of total assets.

“For BNP Paribas, Asia is no longer a project, it is a strategic pillar of our development,” maintains Mr Lecomte, drawing attention to an “extremely resilient” market in 2020, “with a particularly busy August”. More than $5bn of net new money was sourced from Asian clients in 2019.

Although the north Asian operation, centred in Hong Kong, is currently the largest contributor, the operation has made key strategic hires during the last two years to boost business in south-east Asia, prioritising market growth in Singapore and Indonesia.

During the months to come, Mr Lecomte expects to announce “further actions which will strengthen our organisation”. BNP Paribas Wealth Management has not been shy in announcing innovations in recent years. 

These have included the BeAdvised service for smartphones; and MyImpact, a digital tool designed to match client profiles and needs with impact investing strategies, facilitating onboarding and reporting, while helping  “enrich the client journey”.

The challenge with such digital tools is to ensure their penetration is as high as their potential. Despite being designed with client involvement and feedback, the reality is that even though they are popular with those who try them, few investors use these digital tools in their early incarnations. 

The bank is unwilling to share usage numbers. Mr Lecomte acknowledges the scale of the bank’s ambitions, including the full integration of this impact approach in the investment process, and also that he must justify the millions spent in developing the tools.

“It is going to be a long journey ahead of us,” he admits. “But the fundamentals are all there. We need to increase the level of penetration and adoption, across advisory mandates and also in discretionary portfolio management.”

Winning combination

It is this combination of asset management, currency and real estate specialities, corporate banking and wealth management expertise which he believes will define the successful private bank of the 2020s. 

“The private bank of the future is already live in our world,” he says. “It is the one that can mobilise all these resources, which is why we want to further develop this franchise. Technology is a key game-changer for us and so is sustainability.” 

Part of the equation will include the investments unit, where he will encourage the transforming of massive liquidity held by many clients, into return-generating assets. These include “alternatives” such as real estate – mostly focused on French and German properties – and private equity, currently feeding a huge appetite from family offices.

Backing up this redeployment of assets is a new emphasis on the sustainability of investments. Mr Lecomte is under no illusion about how challenging this task will be. “We need to mobilise all our teams for this, if we want to play an important role for our clients.”  

New era

Vincent Lecomte is keen to talk about the transformation of his bank’s business model. “We need to adapt to new ways of working,” he ponders.  “Working as an organisation presents a clear management challenge to us. In order to create the bank of the future, we need to break down silos and improve the level of delivery.”

This has involved a move to a new head office at 1 Boulevard Haussmann in Paris, allowing all wealth management teams to be housed under one roof. “This is the final stop,” he assures us. “There are no longer dedicated offices for anybody. We are moving on with the way we address traditional issues, use digital tools to provide content and share information across the board.”

Although he and other top management members emphasise how they are smoothing the customer journey and improving “client experience,” he makes no bones about the need to respond to the “pressure of margins,” by introducing more “value-added services”, which can attract higher charges. While profits are still healthy, they fell slightly in 2019, as operating expenses surged ahead and Mr Lecomte knows he will be judged by how he manages the balance sheet.

Rising costs of both compliance and pandemic management mean larger private banks, including BNP Paribas, will inevitably focus on controlling these costs in the near term, says consultant Kim Cornwall. “This may well be one of the reasons why BNP Paribas has decided to consolidate the position to that of one global CEO. At the end of the day, BNP Paribas wants to streamline their wealth management operations and having a single global CEO is a good way to do this, with a simplified reporting line and a laser-like concentration on the two most important metrics: cost-income ratios and AuM growth.”