The following is the unofficial transcript of a CNBC interview with UBS CEO Ralph Hamers from the CNBC Evolve Global Summit, which took place today, Wednesday, June 16th.
Video from the interview will be available at cnbc.com/evolve.
All references must be sourced to the CNBC Evolve Global Summit.
----------------------------------------------------------------------------------
Geoff Cutmore: We're very pleased to have with us Ralph Hamers, the CEO of UBS. Ralph, just before we talk about technology, we obviously have a Fed meeting ongoing, we're all very focused on what current inflation rates, as they're being reported, mean for the path of monetary policy. I'm quite keen to hear from you as to whether you think inflation is persistent and will remain, or whether you fall into the Fed's camp that it is transitory?
Ralph Hamers: Well, thank you for having me on the show, Geoff, let me start with that. I've been following the summit for quite some time now today, and honestly I think it's been a real success, so congratulations on that for CNBC. Coming back to your question, if you look at where the economic growth is really, kind of, coming out, over the last couple of months, we had some positive surprises on the upside, but I think the news that is coming out now around economic growth is more or less where we expect things to come. That is one. Then, if you look at how countries are opening up on the back of their vaccination program, the US is pretty much there, Europe is opening up as we speak, but Asia is trailing a little bit there, so we expect actually more upside to come from Asia there. Then, if you then translate that into some of the inflationary effects that one could expect with opening up, and maybe shortage of goods, or base effects, we actually think that the base effects and the supply issues are more or less incorporated now in where we see the inflation going, so therefore, overall, we don't expect inflation to stay, and we think it's more a short-term effect. We also see that in some of the rates, we expect rates to stay low, and you see that again, with our clients, the investment opportunities they're looking for are still searching for yield, because the base rates are low.
Geoff Cutmore: Obviously, the pandemic has given all management pause for thought, and a rethink around the digital strategy, how technology can be utilized to make businesses more efficient and more profitable. Just tell us a little bit about the journey you've started at UBS.
Ralph Hamers: Yeah, so basically, if you look at what our clients truly want, they want to invest with impact. And we just had the discussion on ESG, but you really see clients wanting to invest with impact; whether it's social impact, whether it's climate impact, they really want to see something next to having yield. That's a big trend here for us. The second thing, and, you know, I've been talking to a lot of clients, over the last six months here, our clients, they are successful people, they know what they want, they read up on stuff, they look for products. That's another fact. And then the third fact is that all of these clients, whether wealthy or not, they're so used to the service that technology-driven companies give them, that is invisible yet indispensable, that that is what they expect from us, as well. Now, that's where technology comes in for us. So if you look at UBS, the largest global wealth manager, we have super reach. We are in every region, we are in… we know the investment products out there, and we know what clients want. The question is, how do you bring this abundance of research, this abundance of product offers, in the right way to your clients? And that's where you have to move from technology as an enabler, to technology as a differentiator. So how do you use technology to literally deliver the better service? The better service in understanding your client; the better service in terms of a seamless operation, once they elect to transact with us. Just think about some kind of a Netflix experience, like a Netflix dashboard, where clients could come in, they could click on the different research they're really looking for, they will go deeper and deeper and deeper, they may look at products in specific regions, they may look at public investment opportunities, private investment opportunities. And by them clicking and reading up on stuff, we actually know much better what they're looking for, and therefore then our client advisors can come in and say, "well, we actually see that this is what you're looking for, and this is the way we would basically fulfil your need." That's where the things are going, and that's where, basically, UBS is making the next step, in terms of, you know, dealing with technology to deliver a much better service for our clients.
Geoff Cutmore: Can I ask you, obviously the traditional model is the client advisor, who would walk you through any of the questions that you have, regarding maybe investments you want to make, or a mortgage product maybe you want to take out; effectively, they would be the person that manages your expectations on behalf of the organization, and takes you through the account opening process, and so forth. What happens to those client advisors now? Because it sounds to me that you're talking about putting technology now in the place of that individual. I know that you have this My Way app that you're offering as a platform for customers; are the client advisors now redundant, effectively, and what does that mean for manpower and staffing levels, and the way that the business operates?
Ralph Hamers: Well, thanks for that question, and it goes to the heart of the matter here. Our client advisors, our financial advisors, actually should be supported by the technology. So, on one side, you have technology that takes a normal delivery process, like an account opening, or an execution of a trade, and that should be completely digital. There is no added value for client advisors to be engaged in a process like that. They're advisors. They should advise. They should work with all the knowledge that we can gather, all the research that we can gather, and in interaction with their clients, in order to deliver the best advice to the clients as to where to invest, and how to manage their finances. That is what artificial intelligence can do, because the research even our client advisors can't read all the research that is there. Our client advisors can't comprehend all the product options that are out there. And it's truly there where artificial intelligence comes in, in terms of making sure there is a much better matchmaking between what the client says the need is, and how you further detect that, and the client advisor reacting to that. Then, if you then go to, for example, the My Way app, which is much more an app where the client advisor actually takes our clients through the world of investing, showing that, you know, where their risk profile is, what are the opportunities to diversify regionally, diversify in asset classes, and they can play around with it and see how they can actually stay within profile, keep the return, but maybe go in one sector more than another, or deliver and go for the impact, the social impact that they truly want to find. The options are so big in the world at this moment in time, and literally that's where our ecosystem comes in. We know the third-party providers of a product, we have our own product, we can bundle them all together, and, through matchmaking, get them delivered to our clients in the best way.
Geoff Cutmore: And can I ask you about how the technology helps on the regulatory side? Look, here we are, a big announcement from the EU, ten leading banks have now been frozen out of the bond purchasing program for the next generation funds because of previous anti-trust issues. Is the technology going to help make sure that these regulatory errors happen less frequently?
Ralph Hamers: Yes and no. Yes, absolutely, because I do think that there are solutions for technology for every aspect of regulation, but also client opportunity and client protection. Because you can translate a lot of the data that we're gathering, public data, client-specific data, through which you can be much more precise in terms of what you do and what you don't do. If you look at the regulations coming in from a perspective of, you know, supporting innovation, you see that some of the governments are actually stepping up with supporting a little bit more of room to experiment, on the one side; on the other side, you see that consumer protection comes in, as well, which Balkanizes some of the market again. So regulations help, on one side, to support it, but on the other side, they also don't necessarily create the scale. And if you would then use artificial intelligence, and have your algorithms that work in one market versus the other market, you're actually built to scale on the technology side, on the intelligence side, but not necessarily on your local delivery side, because that tends to be regulated by local environment and local law. So that's where you may not find the scale, but the way you use technology, the way you use code, the way you combine code, in order to come to solutions, that's where you can create the scale for a global wealth manager like UBS.
Geoff Cutmore: And just a final one, prompted by a number of questions that we've had coming in, Ralph, so I'll bundle these together, but thank you to Brad, and thank you to, who've written in here, and it's largely asking about the impact of the pandemic. Asking about compensation, and about banker bonuses at the senior level, have they been affected by the pandemic at all, and some of the economic slowdown we've witnessed over the last 14 months? And then goes on to ask about whether there's been any change in core values at a bank like yours when it comes to shareholders and customers, as a result of what we've experienced?
Ralph Hamers: I'm very happy with this question, and literally, you know, I'm in my tenth month here at UBS, and the first thing that we picked up with the top team is, "Okay guys, let's just look back here. We're in the midst of a pandemic. How do we want to get out of this?" And we decided that a purpose-driven future is what we need as UBS, so we came out with our purpose to reimagine the power of investing, connecting people for a better world. And if you look at just these two statements here, this is exactly answering the questions of some of the watchers there, because we are looking at how can we use the power of investing to support environmental change, to fight climate change, to fight increase inequality, as well. We are looking, for the people that are in our ecosystem, because we have a lot of successful people as clients they are thought leaders; bringing them together will always generate better solutions, with more impact, than having single discussions with them. So connecting these people for a better world, to come to more impactful solutions is exactly the core of our purpose, so I'm very happy with the question, thank you.
Geoff Cutmore: All right, we're going to wrap it up there, then, Ralph. Thank you so much for being with us, and taking time out of your day to join us for the event. Ralph Hamers, the CEO of UBS, and very interesting to hear your questions about the shift in strategies, and hopefully Ralph gave you fulsome answers about how UBS has been rethinking its offering based on the impact of the pandemic.
END
About CNBC:
CNBC is the leading global broadcaster of live business and financial news and information, reporting directly from the major financial markets around the globe with regional headquarters Singapore, Abu Dhabi, London, and New York. The TV channel is available in more than 392 million homes worldwide.
CNBC.com is the preeminent financial news source on the web, featuring an unprecedented amount of video, real-time market analysis, web-exclusive live video and analytical financial tools.
CNBC is a division of NBCUniversal. For more information, visit www.cnbc.com
About the Evolve Global Summit:
As technology and innovation are redefining expectations for corporations to achieve success and growth in an era of disruption, business leaders are embracing change and transforming their organizations for the future. Most recently, unprecedented and unforeseen challenges due to the global pandemic forced companies to rapidly adapt operations, policies and products to survive—and in some cases, thrive.
The CNBC Evolve Global Summit will gather leaders and innovators from around the world for provocative conversations and to share strategies and tactics necessary for adapting, innovating and transforming in this new era of business.
Leveraging the power of CNBC Business News Worldwide with its global roster of anchors and reporters to lead conversations, the virtual summit will feature programming across multiple time
zones originating from each of the following key regions for the first time ever – APAC, EMEA and the Americas – to reflect the borderless nature of business today. The virtual summit will examine the driving forces, both through the lens specific to each region as well as the global economy, creating opportunities for change.
For more information, visit www.cnbcevents.com/evolveglobalsummit