Private banking and wealth management trends

Industry strategic priorities

The core theme of this year’s Survey is that there remains much to be done by the industry. In our analysis, trusted adviser status has not been fully restored and culture and ethics have now come to the forefront of the trust agenda. Existing challenges around operations, technology and next generation wealth transfer need to be addressed, but in our view, achieving excellence in client experience and executing effective transformational change now need to be the priority areas of focus for the industry.

In our view, the industry is now at an inflection point and there are two overarching strategic priorities for wealth managers: achieving excellence in client experience and managing transformational change.

Achieving excellence in client experience:

Across the entire industry, transforming the client experience must be the key strand running through a private bank or wealth manager. Understanding how the key themes discussed herein affect the overall client experience we believe will be key to achieving differentiated, and economically sustainable, business performance. The value exchange between wealth manager and client needs to be fairly balanced. Achieving this balance in the value exchange will require a significant shift in both leadership mindset and front office capabilities for most industry players.

Managing the speed and the effectiveness of change:

Most of our respondents are currently undertaking what they see as significant transformational change. More than half are not fully satisfied with the traction being achieved or that necessary change is occurring with sufficient speed. Our analysis shows that the industry is part way through its transformation and, in many areas, our respondents appear to have underestimated the level of change required to meet existing operational challenges. It is understandable that transformation programmes are proving to be challenging in light of the sheer scale and breadth of the task at hand and the costs involved. But industry players will need to do more across the spectrum of their business and operating models than has been the case to date. There remains much to be done, but for those organisations which transform effectively across the spectrum of their business, the opportunities are significant. This year’s survey again sets out a snapshot of the current state of the industry and provides forward looking views on its likely evolution over the next two years. As such, it provides a useful guide to executives on the future of wealth.

Cost-income data above and below 60% and revenue growth above and below 10%, by quadrant Cost-income data above and below 60% and revenue growth above and below 10%, by quadrant
Leading and high-performing aspirations from current to future state

Leading and high-performing aspirations from current to future state
Top 5 barriers that you are most concerned could impede your organisation’s
abilities
Top 5 barriers that you are most concerned could impede your organisation’s abilities

Analysis & opinions

The reshaping of the wealth management industry is in its early stages and players will need to make key choices about where and how they compete across their business models.
Women are an increasingly important, empowered, and wealthy client demographic. Yet only 8% of our respondents currently consider gender when segmenting their client base.
Wealth managers should they choose to outsource non-core elements of their services, must remember that they retain fiduciary responsibility. They will need to master negotiating service levels and assuring data security with their partners.
Digital change presents the promise of a re-imagined client experience. It presents opportunities for competitive differentiation. Older investors are already using tablets while smart phones have become an essential part of millennial daily life. Wealth managers will have to get better at viewing the future through their clients’ eyes.
As regulation continues to reshape the industry, successful players will reposition their business models to better adapt to the regulations.
Cyber security and privacy protection is now a C-Suite issue. Traditional approaches to cyber security are no longer appropriate. To build digital trust and ensure confidence in their cyber security strategy, wealth managers must take a different approach.
Firms should not underestimate the importance of culture, value and employee engagement as they look to achieve their business objectives, especially as they seek to provide incentives and appeal to a more diverse employee population.
Private banks and wealth managers need to be courageous and proactive if they are to rebuild external public perceptions and engender higher levels of client confidence and trust.
Going forward clients will demand a better client experience providing opportunities for both traditional and new wealth managers.
Fully exploiting data is a challenge as wealth managers have fragmented technology architectures. Differences in timing, release levels, packages and versions have all made the problem worse, affecting the roll out of new implementations.