Nearly every new company promises some sort of technological innovation nowadays. The opportunities can seem almost infinite. But as the development and usage of tools like artificial intelligence grows, another question pops up: Can we still trust what companies do with their technology, and our data? A sector which is historically reliant on trust is financial services. We spoke with Philipp Rickenbacher, CEO of Swiss wealth management bank Julius Baer and a speaker at the St. Gallen Symposium, about the issue of trust and technology.

According to Rickenbacher, trust in banks comes from long-term relationships: “Most – if not every – good client relationship has started with a long-term personal connection between the client and the relationship manager or with multiple people in the bank,” he says. Additionally, the continuous creation of value for the client is very important. As technological innovation plays a greater role, the bank-client relationship has grown to include technology too.

KYC – “know your client” has always been a watchword for financial services providers. Knowing the background of the client, his or her sources of wealth and their preferences and ambitions forms the basis of the relationship – the more data, in other words, the better. “Client data is of essence in our business and safeguarding this data has always been at the center of a banking relationship in wealth management – and always will be,” Rickenbacher says. “In the evolution of big data, the banking industry is nothing but a tiny dwarf when it comes to collecting, storing and analysing client data. But obviously we are interested in having a complete picture of the client in order to serve them better.”

As for privacy concerns, Rickenbacher insists: “Banks will not sell client data – we will never do that. That is not part of our business model.”

To benefit from client data, of course, banks need algorithms. According to Rickenbacher banks do not use algorithms enough right now: “we are just scratching at the surface of what is possible.” Rickenbacher believes, this is a journey worthwhile further pursuing with our clients. Banks use algorithms and models for their risk management calculations. Therefore, to trust them, they need to know them inside and out: They are a starting point, but not the ultimate answer. Philipp Rickenbacher, who earned a masters’ degree in biotechnology from ETH Zurich, learned early in his scientific career that “you always need to know the limits of your model,” he says.

That’s why at Julius Baer models are constantly validated by people: “You will always have the human brain, intuition and experience that complements, validates and further develops the algorithms, and ultimately applies judgment,” he says. “In that combination, data is extremely powerful.”

The technological innovation has huge potential to transform the way we do banking. With that in mind, it is important to find the right balance between technological innovation and risk mitigation. Rickenbacher points out the importance of pursuing both things at the same speed. “Everything we do, is built with an eye on the regulatory framework we have to comply with, the stability of the bank, and the fiduciary duty we have towards our clients.”

After all, banks have always had to — and will have to — handle risk. And technology means another risk to manage is client education. “It is not just about creating tools,” Rickenbacher says. “It is also about enabling the users to use those tools in the right way.”

There seems to be a way to maintain technological innovation within the financial sector: To sustain trust in technology, understanding how the technology works is key. Trust issues may take time to address, but that also means more time to educate customers and bankers alike.

Lisa-Maria Neußl