Q&As with Lombard Odier’s Ecosystem¹ of Strategic Alliances

Digitalisation in the financial services sector has become a business imperative, with the pandemic accelerating the intersection of financial services and the adoption of digitalisation technology in the broader economy. Lombard Odier’s long-standing strategic decision to remain at the forefront of technological developments means that we continue to invest heavily in our own proprietary banking technology, and to integrate client-centric digital solutions.

Meanwhile, in the world of alternative investments, digital assets such as cryptocurrencies and blockchain-based technologies are increasingly hard to ignore. In Asia, our Ecosystem of Strategic Alliances allows us to share our knowledge and insights, including both global and local best practices, on the technological front. Here we speak to some of the Strategic Alliance’s private banking heads to learn their take on the digital assets market.

Growing demand amongst Next Generation for cryptocurrencies as alternative investments

In Japan, there is growing demand for cryptocurrencies, especially among younger generations of the Ultra High Net Worth (UHNW) segment, with many already holding cryptocurrency positions on the platforms available online.

According to Yuichi Kagawa, Head of Wealth Management, Mizuho Securities (Singapore), this is a trend that cannot be disregarded.  “We think that the institutionalisation of cryptocurrencies will be an important factor for us to be able to provide safe and sound investment solutions in terms of portfolio exposure in our clients’ holdings,” Mr. Kagawa added.

Find out more about what can we expect from blockchain

Increased interest but private banks taking a cautious stance

Similarly, in the Philippines, UnionBank Private Banking, the private banking division under UnionBank of the Philippines, is seeing increased interest as digital assets become more mainstream. As noted by Arlene Joan T. Agustin, Senior Vice-President, Private Banking Group Head, UnionBank of the Philippines, UnionBank has started to explore the cryptocurrency space in recent years, and has launched some crypto-related programs and products.

“UnionBank Private Banking has yet to fully navigate this area,” she added, “but recognises that digital assets and cryptocurrencies are becoming more mainstream. In fact, some non-traditional clients are beginning to incorporate crypto into their investment portfolios.”

According to Jirawat Supornpaibul, Private Banking Group Head from Kasikornbank in Thailand, there has been interest in cryptocurrencies, but currently only a handful of active clients are holding the asset. “Clients are interested to know if we are launching any crypto-related funds, or if they are missing out by not having cryptocurrencies in their holdings. These questions are generally prompted by the clients’ desire to seek alternative investments compared to traditional assets, and also the great performance observed," said Mr. Jirawat.

The bank is still taking a cautious approach. “We are in touch with the development of the digital assets landscape, both in terms of market and regulations. There is currently no active recommendation in terms of asset allocation, selection and valuation in terms of cryptocurrencies, and our general guidance to clients would be to take only a small position relative to their total liquid wealth if they are keen to participate.”

Read more about cryptocurrencies' rise and fall

Blockchain Technology could bring considerable value for innovation

According to Taipei Fubon Bank, virtual currencies are still treated as highly speculative “virtual assets” rather than currencies in Taiwan – banks are not allowed to issue or sell virtual currency-related financial products yet.

 Despite that, Fubon Financial Holdings²’ chief economist said, “We believe that the blockchain technology used by digital currencies has considerable value for FinTech innovation, and we will continue to apply it to e-wallets and e-payments. Fubon first tested blockchain technology in 2017, and its application could be extended to cross-border remittances and supply chain financing in the future.”

Embracing the FinTech evolution

 At Lombard Odier, we expect blockchain to be adopted more widely, given the acceleration of FinTech growth trends and digitalisation of the broader economy. We anticipate that the world will move towards a fully cashless society and believe that digital finance could aid financial inclusion for all.

Vincent Magnenat, Limited Partner and CEO, Asia, Lombard Odier said, “In today’s society, technology is a given and no longer a differentiator. As developments in the FinTech space, such as blockchain technology, continue to revolutionalise many aspects of the economy and banking services, it becomes essential to identify and leverage innovative technologies. We believe that the rise of technology ecosystems could offer significant opportunities, which is why we have strategies that embrace the digitalisation of finance.”

¹ A unique model in Asia, Lombard Odier’s Strategic Alliance Ecosystem brings the bank’s investment and family services expertise together with that of the leading local financial institutions in the region to holistically serve the wealth management requirements of entrepreneurs and families. Clients are offered a tailored level of excellence to satisfy both their local and international private banking and investment needs.

² Taipei Fubon Bank is a key subsidiary of Fubon Financial Holdings