The Deloitte International Wealth Management Centre Ranking 2018
The winding road to future value creation
The third Deloitte International Wealth Management Centre Ranking shines light on the competitiveness between international private wealth management centres and analyses their market volume, growth performance, profitability and efficiency over the past years. While the challenges international wealth management centres face have been increasing, the leading hubs have largely risen to them, leaving others behind.
- About the report
- Key findings
- What it means for Switzerland
- A call to action for companies
- Our experts
About the report
The study highlights nine wealth management centres. Results of the 2018 edition show findings for Switzerland, Singapore, Hong Kong, the US, the UK, the UAE, Luxembourg, Bahrain as well as Panama and the Caribbean.
The below tool depicts the ranking of each wealth management centre by competitiveness, size and performance.
The business environment for international wealth management centres has become more challenging over the last years. The focus for competitiveness has shifted towards provider capability and digital maturity. Between 2010 and 2017, there has been a fall in international market volume (IMV) as well as net new assets (NNA) of the leading centres. Cost competitiveness remains an ongoing challenge.
Leading centres: Switzerland still on top, others closely behind
Switzerland is still the leading centre in terms of competitiveness, size and performance. However, Switzerland is losing ground in IMV, while others are catching up. Hong Kong has the highest growth rate in IMV (+122% in the last 7 years), and the US (+48%) is also gaining ground.
The leading centres are mostly rising to the cost challenges that banks are facing in today’s increasingly regulated environment. Digital capabilities have improved, and the most competitive centres are setting the standards for in terms of provider capability.
The leading centres are mostly rising to the cost challenges that banks are facing in today’s increasingly regulated environment. Digital capabilities have improved, and the most competitive centres are setting the standards in terms of provider capability.
Most challenged centre: Panama & the Caribbean
Switzerland has lost some IMV, but it remains the biggest centre. Panama and the Caribbean have lost the most ground. There is a clear divide between the best and the rest. The lowest ranked of the nine centres, especially Panama and the Caribbean, are worst by almost every measure. Hong Kong is something of an exception: it has experienced the largest NNA growth, its IMV is rising, and it is among the best for competitiveness; however, it has an increasing cost-income ratio, so growth is coming at a price.
What does it mean for Switzerland?
- While Switzerland was the only centre in the top 4 to lose a portion of its IMV (-5.2% between 2015 and 2017), it still remains the biggest centre with US$1.84tn international market volume.
- The centre’s well-rounded competitive characteristics enabled it to outperform its global counterparts by increasing its profit margin by 18.2% between 2015 and 2017.
- This development needs to be taken with a grain of salt, as Swiss private banks struggle to attract new assets and have difficulty enhancing their traditional business model by investing in innovation and enhancing client experience.
A call to action for companies
- Identify a differentiating strategy that will provide a clear value-add to targeted international client segments and drive improvements in client experience and business performance.
- Create an effective mind shift towards rethinking and innovating business models, in response to changing client preferences and increasing competition from domestic players.
- Attract employees with relevant skills (language, compliance, knowledge of local needs & preferences), ensure access to efficient market places and build ecosystems with other financial service providers.
- Further foster access to international wealth management markets by promoting free trade of services and showcasing adequacy of regulations.
Embracing the Business Model Change
Capturing value in a shifting environment