Innovation Spotlight on Julius Baer

August 11, 2021

How to set the stage for innovation.

Julius Baer is the leading Swiss wealth management group. They are a founding partner of F10 Switzerland with an impressive track record in corporate innovation.  

We asked Senad Celebic, Julius Baer's touchpoint  into the F10 and responsible for the collaboration with startups, how to set the stage for innovation and what it has to do with falling in love.

The role of innovation in today’s context

Innovation ultimately helps organizations deal with complex and fast-changing environments. During the pandemic, we’ve seen accelerated dynamics across many different dimensions: Changes in customer behavior, travel behaviour, new ways of working, changing regulations, new investment priorities. Take sustainable as an example. Sustainability was important before the pandemic – but no one could have predict the scale of the shift in mindset.

Those changes don’t exist in a vacuum, they are interrelated. It’s impossible to say with absolute certainty what we will need three years from now when it comes to innovation.  

How Julius Baer approaches startup collaboration

One way to discover new opportunities in this changing environment is experimentation. This type of bottom-up innovation is where for us F10 comes in. This does not compete with the formal innovation processes, it’s complementary and there’s permanent exchange and collaboration. Experiments are quite early stage. When such an experiment works well, and we consider a larger-scale implementation, that’s when a project formally moves into our innovation boards.  

At the end of the day, it’s not important whether innovation comes from a Fintech or whether someone internally has a brilliant idea. However, Fintechs tend to approach a problem openly with an unbiased perspective and through that have the ability to open your eyes to certain problems. Thus, by working with Fintechs you have a great instrument to find solutions that help you adapt to our changing environment more quickly.

 

The Vestr Case

Vestr was part of the incubation program in Zurich a few years ago. They came into the program with only a couple of slides and the idea to digitize the life-cycle of Actively Managed Certificates (AMCs).  

AMCs, due to their operational complexity, dynamic nature and highly non-standardized life-cycle events, were largely handled on spreadsheets. We saw a huge use case for Julius Baer and collaborated with Vestr to develop the prototype into a live minimum viable platform with Julius Baer as its first client. Subsequently, the platform was vastly extended terms of functionality, managed assets, but also user groups: We opened the platform also for our Intermediaries clients and allow them to structure AMC on their own.

The joint development of the platform, combining the founding team’s previous experience working with AMCs, with Julius Baer’s specific requirements and processes, laid the foundation for building a platform that could scale globally.

The role of digitalization in wealth management & private banking

Wealth management is based on trust. For us, the relationship with the client is a core element of the strategy and the business model. Yes, there are things you can digitize. But when you talk about your financial future, the financial security of you, your family, your children – you need to build trust. And you can’t build trust only with digital means. Digitalization at Julius Baer is complementary and in support of the relationship managers to better serve the customer – through their channels of choice.  

We used to talk about Fintechs and how they would disrupt the industry. Today, that may be true for certain use cases – for example in the retail business, where you have big standardization over a large amount of transactions. But in our industry - wealth management and private banking – we work much more in a B2B2C modality with startups. It’s all about cooperation and less about competition.  

Banks in general are highly integrated today – covering the largest part of the value chain. With the given dynamics, I believe we are moving towards more fragmentation - collaboration with service partners will become more and more important for us. Fintech companies will play an important role in such a setup, with open banking as a crucial enabler.

How to set the stage for successful innovation internally

  1. Foster an experimental mindset

Innovation is also a cultural question. Innovation - by definition – contains risk. When you experiment, you can fail. Therefore, you need to make sure to instill an experimental mindset in your company culture. This is a profound transformation and doesn’t happen from one day to another.  

  1. Have internal processes that empower innovation

Governance is key. When we talk about innovation, you can’t create a detailed roadmap of exactly what will happen in the next three years and you need to be quick to adjust to changes in the environment. Internal process and the cultural mindset of an organization need to support that.  

  1. Free up resources of key people

Critical resources, people with deep knowhow in a subject matter, play an important part in bringing innovation into an organization. At same time, they tend to be those most sought after and valued in an organization and have little to no time. Make sure they have enough free capacity to think, because innovation needs time. There is a reason why mayor, innovation driven tech companies offer a significant time allowance to their employees for own projects.

  1. Engage stakeholders as early as possible

You can’t come with a final solution to your internal stakeholders. The people who will be important to facilitate an experiment internally need to have a feeling ownership from the start. You need to invite and involve them as early as possible.

  1. See the potential

Sometimes it’s not as simple as a startup turning up with a solution to your specific problem. You need to connect the dots, see the potential and bring people together early.  

Case: Think beyond the obvious

One great example is related to a specific challenge in the field of alternative investments: there are some processes that are quite complex and need to be handled manually. This causes the need of big ticket sizes for such transactions to make business sense, which prevents alternative investments to be widely available to all clients.  

Knowing that issue, we were aware of a deeptech startup in the Zurich Fintech Ecosystem that allows you to depict business processes quite easily through tokenization and smart contracts. We had an intuition that there could be a potential use case for our problem. We brought the relevant people from Julius Baer and the startup together to F10 and facilitated a very early-stage discussion on the possibilities. It was enough to light the spark and after a few more interactions we now stand at the beginning of a proof-of-concept for a use case with huge potential.  

Why F10

F10 is much more than startups. F10 is an ecosystem. A platform for many actors in the innovation space. It goes far beyond the startups that go through its programs: it offers a thriving corporate, investor and mentor community with a lively exchange.  

In my experience, one of the key requisites for innovation is exchange. Exchange of experiences, challenges and ideas. There is such diversity of partners at F10 with very different backgrounds, challenges and approaches – this is a great opportunity to learn for everyone.  

Some time ago, we published an internal article about our involvement at the F10 and we titled it: “Innovation is like falling in love. You can’t plan it, you can only set the stage for it.” F10 is that stage.

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