[Summary of Frank Van Hoornweder speech at the COMARCH conference]
A traditionally lucrative market, high profitability comes from growing the assets, particularly with existing customers, and maintaining low capital expenditures. However in more recent years government regulations have impacted that model by bringing about significant operational spend on the administration and compliance of these regulations. As an example, within Private Banking, European regulations have increased the average cost of customer management by 20-30%.’
Private Banks Management are responding to the regulatory challenges by:
- Redefining value proposition and pricing model aiming at
- Getting paid correctly for added value activities whilst offering other services in line with market (eg. brokerage). Develop/focus on new value added services.
- Focusing on core clients base and higher profit clients (client acquisition and retention)
- Delivering quality service/investment advice and best of breed interaction tools, converting digitalization into competitive advantage
- Optimizing front-office organization (redesign advisory process) and operating model, seeking synergies (eg private banking segment of universal bank with asset management and investment banking).
- Optimizing cost/income, automating mid/low value activities
Don't hesitate to contact Initio to know more about threats and opportunities of Regulatory challenges in affluent & private banking.