Private banks that fail to embrace information technology and mobile services are at risk of becoming "dinosaurs," says an executive at ABN Amro Group NV.

Startup wealth managers like Nutmeg Saving and Investment Ltd., based in London, and Wealthfront Inc., based in Palo Alto, California, pose a threat to banks that don't keep pace with innovation, Hein van der Loo, head of strategy at Amsterdam- based ABN Amro's private bank, told a Euroforum conference in Zurich yesterday.

"These are the real competitors," he said. "They're actively there and they're stealing clients from us."

Digital financial companies are increasingly poaching clients who no longer need to consult a person for basic investment decisions, Deloitte LLP said in a report last year after studying 50 wealth management startups.

Nearly two-thirds of the world's high-net-worth individuals expect to manage most or all of their wealth digitally within five years and would consider switching providers that provide such services, Capgemini SA and Royal Bank of Canada said in a report in June.

New market entrants have made older banks such as ABN Amro, which traces its roots to the 18th century, more aware of clients' need for digital technology. Private banks from ABN Amro to Citigroup Inc. are using mobile applications to increase interaction with the bank, providing access to securities research, investment management and communication with advisers through tablets.

Citigroup began offering its In View application to private clients in February after 20 months of preparation, Dena Brumpton, chief operating officer for Citigroup's private bank, said in an e-mail to Bloomberg News. Enabling clients to contact their advisers via mobile and desktop devices from any location will "fundamentally change how bankers and clients engage," Brumpton said.

The banking industry has "grossly neglected" innovation in the past, Credit Suisse Group AG Chairman Urs Rohner said at a presentation to the Swiss-American Chamber of Commerce in Zurich today. "Innovation in general wasn't considered relevant for banks for long - for too long as we understand now," Rohner said, according to a transcript of his speech.

Credit Suisse is introducing Digital Private Bank, starting in the Asia-Pacific region. The offering will include portfolio management tools, customized market information as well as social networking for clients, Rohner said. Credit Suisse declined to say when the product will become available.

Wealthfront, which oversees $1.4 billion, targets investors who don't already use a financial adviser and are seeking a low- cost, automated solution, said an external representative for the firm in an e-mailed response to questions. The company charges a 0.25 percent advisory fee on managed assets exceeding $10,000, and additional fees to buy exchange-traded funds, according to its website.

Nutmeg, founded three years ago by Nick Hungerford, offers customers live online chat and telephone support rather than face-to-face meetings. It charges 0.3 percent to 1 percent of managed assets, according to the company's website. Hungerford previously worked at Barclays Plc and Brewin Dolphin Holdings Plc.

An ABN Amro survey this year found that younger clients would leave the bank within three years if the company didn't invest more in mobile technology, according to van der Loo.

"This industry has a tendency to be a dinosaur," he said, adding that management at private banks should ideally include a chief innovation officer who understands technology and clients demands for services to keep improving.

Private banks have been slow to appoint executive officers with a background in technology, according to Sebastian Dovey, founder of Scorpio Partnership Ltd., a London-based consultancy. Some executives "giggled" when the consultancy suggested they replicate the structures of companies that create online communities, such as Facebook Inc., he said at the conference.

"The organization chart of Facebook is the future for most global corporations and the banks need to catch up," he said.