SEI Investments Co. of Oaks, Pa., is both a technology vendor and an asset management services provider. But it has had trouble convincing European banks it can do the former and U.S. banks it can do the latter.
SEI has spent the past three decades establishing itself as a provider of back-office products to U.S. banks and the past 15 years building its asset management business overseas, according to Joe Ujobai, an executive vice president of global private banking at SEI. It hopes to improve cross-selling between the two areas with a new global wealth platform that it will bring to market at the end of the month.
"Banks overseas are more willing to ask us for help when it comes to wealth management than U.S. banks," said Joe Ujobai, an executive vice president of global private banking for SEI. "But that might just be because of our history."
In some cases that history goes back many years.
"We just celebrated our 30th anniversary as a technology provider for Wells Fargo and we had a cake and everything," Mr. Ujobai said. "It is a great relationship with great access to senior executives, but they view us as a technology provider. Have we tried to sell them asset management services? Not yet. But are we going to? Absolutely."
Mr. Ujobai said that as SEI was beginning to develop and launch an array of wealth management services in the early 1990s, "U.S. banks were convinced that they could build all of this on their own."
"So we started talking to RIAs" - registered investment advisers - "and that channel really took off for us," he said. "We changed our focus for U.S. distribution away from banks because we weren't very successful with them."
Through March 31, 14.5% of SEI's $189.9 billion of assets under management was from the U.S. bank channel.
Across the Atlantic, however, it has been a completely different story. Mr. Ujobai said SEI's technology offerings did not sell well outside of the United States, so the company led with asset management. "We have succeeded with asset management overseas because that is what worked for us," he said.
As U.S. banks have become more comfortable with third-party providers and outsourced wealth management services, they have become ripe for cross-selling, Mr. Ujobai said.
"My initial feeling is that there is finally some interest and some opportunity for us in the U.S.," he said. "Banks are now more open to the concept of open architecture and guided architecture. They are interested in independent, unbiased, advice-driven solutions."
SEI's global wealth platform will go live with its first client, HSBC in the United Kingdom, in two weeks. Mr. Ujobai said the platform is a front-to-back-office tool that handles everything from opening an investment account to buying securities to rebalancing to trading to providing monthly statements and customer service.
"This platform provides the total infrastructure from technology to asset management for a private bank," he said. HSBC was an early adopter of SEI's asset management platform and is using SEI's investment processing service, he said.
SEI will begin marketing the platform to banks in Europe, specifically in the United Kingdom. Mr. Ujobai said the company is in discussions with most of the major banks in Europe and called the pipeline overseas robust.
"Most U.K. banks haven't quite built a wealth management platform on their own," he said. "But I am confident we can also be successful in the U.S."
Geoffrey Bobroff, an analyst with Bobroff Consulting in East Greenwich, R.I., said U.S. and European banks value SEI, but the company has not really generated strong cross-selling because many are unaware of the variety of SEI's offerings.
"The types of relationships that SEI has in Europe are certainly different than the types of relationships that SEI has here in the U.S.," Mr. Bobroff said. "In the U.S. they have been and will continue to be primarily a technology provider, but the relationship they have in Europe could lead to greater cross-selling sooner rather than later."
Dale R. Smith, an executive vice president at U.S. Bancorp and its head of trust, technology, and support services, said the Minneapolis company has had a relationship with SEI for 25 years, but since it has its own asset management company, it does not really consider SEI for those services.
"Many of the products that they are beginning to offer appeal to certain segments of their customers," Mr. Smith said. "SEI serves everyone from international banks like ours, to community and regional banks. Some of those [asset management] products are targeted to institutions who seeking to outsource that part of their business."
In May, U.S. Bancorp renewed its contract with SEI for its portfolio processing and accounting system. SEI has also helped U.S. Bank assimilate two 2006 acquisitions: the corporate trust and institutional custody businesses of Wachovia Corp. and the municipal and corporate bond trustee business of SunTrust Banks Inc.
Mr. Smith said SEI is an important technology partner for U.S. Bank, but "a full-service platform really isn't something that we need."
Over the past couple of years SEI has taken several wealth management initiatives abroad before bringing them back to the United States. In December it began using its guided architecture approach to attract bank and trust customers.
The strategy, which SEI called the next step for banks that dove headfirst into open architecture, allows banks to integrate advice into a more finite list of nonproprietary products in an effort to become a client's "investment quarterback."
SEI has used the guided architecture approach successfully in both Europe and Asia. It has signed up banks in Switzerland, Hong Kong, Singapore, Monaco, Luxembourg, and the United Kingdom and is working to gain traction in the United States. Mr. Ujobai noted that with the rising costs of compliance, it makes sense for banks to outsource certain capabilities.
Ron Albahary, SEI's managing director of private client portfolio management, said banks need partners that stay on the cutting edge in product development. SEI spends 10% to 12% of its revenue on research and development of new products, he said.
Mr. Ujobai said he believes SEI can increase its cross-selling in the United States and beyond, though it is fairly new to cross-selling.
Mr. Bobroff said banks' compartmentalization will continue to hinder cross-selling to them. Mr. Ujobai agreed but said that "if we can get our foot in the door, whether Europe with asset management or in the U.S. with our technology, we are confident we can expand our breadth and depth from there."
