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UBS Group (UBS) Proceeds With Digitization, Expands Globally

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Zacks Equity Research
·3 min read
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In the current era of digitization, like many other big banks, UBS Group AG UBS, the Swiss investment bank is targeting to expand internationally more rigorously through its digital portfolio management system, per Reuters. The bank aims to cater more number of millionaire clients owing to enhanced digital services, and take the net assets to a level of $5 billion.

Previously also, UBS had made a similar move by foraying into robo-advisory services few years back. Now, the global wealth manager plans to improvise and expand the recently-launched hybrid platform. This platform will aid clients in customizing their portfolios though a digital mode helped by human advisers.

Per UBS chief executive Ralph Hamers, the Swiss bank is focused on technology advancement in its core private banking business to boost revenue growth and maintain operating efficiency.

Per the source, since the May launch of Its My Way system, the bank has attracted $1 billion from Swiss domestic clients. Notably, the bank met the target a year early, along with the COVID-19 pandemic pushing customers toward using online services. The initial investment of the platform came in at around 250,000 Swiss francs ($274,725).

"Since launching in Switzerland, we've never seen so many non-clients reaching out to us," Andre Spycher, head of sales management for UBS wealth business in Switzerland, told Reuters. "We still see massive upside potential in Switzerland; and as the largest wealth manager in Asia, we see huge potential there, too," he added.

Per Spycher, post the platform’s roll out in Asia, along with German and British international clients, UBS is likely to foray further into Europe next year.

"Clients are willing to pay a premium," Spycher said of My Way. Moreover, the bank’s profits have gone up on the increased use of the platform, lowering administrative and regulatory costs, and improving internal processes.

Overall, the launch of the platform has been a success for the bank. The product not only attracted entrepreneurs and executives, but also older wealthy clients. Notably, the bank might see a surge in fees as these clients were managing their portfolios on their own prior to the platform.

Our Take

UBS Group continues to execute restructuring initiatives in a bid to free resources and invest in profitable areas to better serve clients. However, the top line remains under pressure due to the prevailing negative interest rates in the domestic economy.

The company has gained 13.3% year to date as against the 19.9% decline recorded by the industry. Currently, UBS Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other financial bigwigs, Bank of America BAC, JPMorgan JPM, Deutsche Bank DB are also moving ahead with the digital tools to survive in the current era of digitization.

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