SEI Investments announced that is has signed its first U.S. banks for its holistic global wealth services platform after initially struggling to gain a foothold in offering wealth management tools to financial services firms in the United States.
The Oaks, Pa., company, which has developed business in the United States by offering technology and back-office services and in Europe with its wealth management services, signed agreements with Cullen/Frost Bankers Inc. of San Antonio and Centier Bank of Whiting, Ind., to provide wealth management services to both companies.
SEI offers its clients, which includes bank, financial services companies and registered investment advisers, a comprehensive view of their objectives and financial holdings. It processes private banking business in 12 countries, transacts in 27 currencies, and trades on 53 exchanges, all using straight-through processing.
David Campbell, a vice president of private banking at SEI, said the company expects to begin transferring Cullen/Frost and Centier to its wealth platform this year, with full implementation by early next year.
He said there is interest from other U.S. banks and that he expects more to join the platform "sooner rather than later" now that a couple of banks are using the platform in the United States. "We continue to talk to a lot of banks and we expect more implementation in the latter part of next year," he said.
Mr. Campbell said SEI is targeting an array of banks. He called Frost a midsize regional and Centier a community bank.
"As we demonstrate the scale and viability of this offering, we believe that we can continue to expand upstream," he said. "But for now, our sweet spot will be with regional banks in the United States. … We hope to have a number of deals in place by the end of this year."
Last year SEI signed HSBC Holdings PLC of the United Kingdom as its first customer to use its global wealth services platform, but adoption in the United State took longer because "our roots in the U.S. were as a technology provider," Mr. Campbell said in an interview last week.
SEI has spent the past three decades establishing itself as a provider of back-office technology services U.S. banks, but it has had a hard time gaining traction as a wealth management provider domestically. It began developing its wealth platform in the early 1990s, but at that time most banks were convinced they could create their own.
Mr. Campbell said that current market conditions have forced U.S. banks to reconsider where and how to deploy their wealth management capital.
"A greater propensity of banks are looking to redirect their spending on personnel on the front end rather than spending capital on administration and operations," he said. "Banks want to focus on the front end rather than on back- and middle-office activities. Most, maybe not the largest banks, but most are focused on the large amount of assets required to be competitive in wealth management."
Bob Scott, a senior vice president and head of wealth management for the $1.7 billion-asset Centier Bank, which has only $480 million of trust assets under management, said that by using SEI's platform, Centier will be able to spend more on the "front end," but how much will be difficult to determine until the platform goes live next year.
Richard Kardys, a group executive vice president at Cullen/Frost, said that if his company tried to create this platform on its own, it would have required "an enormous capital investment, and that isn't a choice we could've made." But that does not mean the company will use the excess capital to develop its front-end capabilities.
"We have a system now that is state-of-the-art, and that is going to help us gain and serve customers, but that means we have capital that perhaps we can spend elsewhere in the bank," he said in an interview last week.
Mr. Scott said that Centier Bank has used SEI's back-office technology services for almost 10 years. He said in the fall of 2005, he was introduced to the concept of SEI's global wealth services platform and began to work on implementing it.
With the new platform, Centier should be able to maintain its 20% growth in assets under management that it has had for the past three years, he said.
"I'd love to sustain that growth and I'd love to enhance it," Mr. Scott said. "I think this platform is going to make it possible for us to reach out to more high-net-worth individuals. We are not talking about megamillionaires here, but we think we can reach individuals with between $1 million and $3 million in assets."
Mr. Kardys said that Cullen/Frost has used SEI's back-office trust software system for the past 18 years. He said its contract with SEI was set to expire at the end of this year and, after conducting due diligence with a series of other technology providers, Cullen/Frost decided to switch to SEI's global wealth platform.
Mr. Kardys said SEI global wealth management services platform was attractive because it provided a wider breadth of services He said Cullen/Frost, which had $24.5 billion of assets under management on Dec. 31, will provide the holistic group of services to its high-net-worth customers and its trust customers, but he said he is not sure it makes sense for its standard brokerage customers.
"We have had some strong growth in the past year when trust fees increased 11%, and this platform is going to help us maintain that growth," Mr. Kardys said.
Analysts said SEI, which announced the Cullen/Frost and Centier deals Friday, is still regarded in the United States as primarily a technology provider. But it can change that perception by signing up more banks to its global wealth services platform, he said.
Mr. Campbell said: "SEI's roots in the United State are in technology. We've been outsourcing in that space for decades, but this is really a step in the right direction to illustrate how we can deliver additional services and really expand the services we are offering to our existing customers."
