Solutions

Centre of Excellence­ in Private Banking and Wealth Management

The Private Banking & Wealth Management industry is in the midst of a substantial transformation process turning from a sellers’ into a buyers’ market. In order to assist our clients in this process and to partner with them in mastering the challenging environment of increasing margin pressure, the digital transformation and persistently increasing regulatory requirements we have pooled our expertise and created a dedicated Centre of Excellence.

About the Centre of Excellence in Private Banking and Wealth Management

Our Centre of Excellence in Private Banking and Wealth Management is a dedication to the industry and its players providing expertise founded on four key platforms specifically aligned to the Wealth Management’s challenging environment:

  1. New technologies: Addressing innovation, disruption and the digital transformation
  2. Regulatory change: Providing solutions to manage the regulatory agenda
  3. Tax and legal change: Advising clients in tax and legal matters on all levels
  4. Managed Services: Creating efficient sourcing models

Challenges in Wealth Management

The Wealth Management and Private Banking industry has experienced substantial challenges in the recent past and is still in the midst of a major transformation process.

While the increasing complexity, interdependence and cadence of the international regulatory agenda has placed considerable demand on the change capacity of private banks, the digital transformation along with persistent margin pressure have not refrained. At the same time, digital disruptors are increasing competition and clients are becoming ever more demanding in an agitated world where economic turbulences and political imponderables are at the order of the day.

Over the past more than fifteen years, the Private Banking and Wealth Management industry has experienced substantial decline in profitability driven by a myriad of interlinked challenges.

Average profit margin index of European private banks

Key challenges

  • Recent years have seen Private Banking turning from a seller’s into a buyer’s market with increasing sophistication of the Private Banking client segment. Clients are more likely to compare service offerings and show a decreasing willingness to pay for services with no clear value add. Additionally, clients are becoming more and more comfortable making their own financial decisions.
  • This is as well reflected by an increasing acceptance for digital banking services, which has reduced the frequency of vis-à-vis client interactions in branches, simultaneously creating a cost disadvantage for private banks relying heavily on their physical location, client interactions and a demand for convincing digital channels to remain competitive. Having understood this development, new competitors (e.g., FinTechs) are entering the market leveraging latest technological developments and more flexible infrastructure. Banks will need to compete for market share or partner with these digital disruptors, particularly in client segments with low and medium profitability.
  • Intensifying and on-going regulatory and fiscal pressure has forced private banks and wealth managers to re-examine their business processes. As a result, many banks are engaged in costly re-organisations and restructuring efforts to meet regulatory demands, hence allocating investments to reactive transformations rather than to pro-active business development.
  • All this is accompanied by the fact that economic turbulences and political imponderables have become part of the order of the day impacting the Private Banking as for example meeting investment targets is becoming increasingly unpredictable und uncontrollable, and the low interest regime is persistently placing a cost burden on private banks.

Find out more about this and the value chain fragmentation of banking services in our “Swiss Banking Business Models of the Future – Embarking to New Horizons” report.

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How Deloitte can help

Our Centre of Excellence in Wealth Management and Private Banking provides deep expertise based on four focus platforms that speak directly to the prevalent market challenges

The key focus platforms cover detailed offerings:

1. New technologies

Technology is rapidly changing enabling competition to compete with different cost structures, have faster and more convincing channels, gain information faster and with more insight and change business models. We provide “end-to-end” digital transformation services for the private banking industry and will be focussing on the following topics: Digital Banking, Data Analytics, Core Banking Platforms and Robotics.

2. Regulatory change

Regulation and structural reform will drive many change programmes in the foreseeable future. Our clients need advice to help them undergo dramatic changes while staying or becoming compliant with existing and emerging regulatory requirements (e.g., MiFID II, Fidleg). This includes business transformation, M&A and potentially restructuring activities.

3. Tax and legal change

The pressure for global tax transparency from governments around the world to crack down on tax evasion has strong implications on Switzerland’s private banking centre. We help leading wealth managers to anticipate changes and transform their offshore focused business models in order to reach compliance with major tax regulations such as Automatic Exchange of Information or FATCA.

4. Managed Services

Apart from regulatory complexity, cost reduction continues to be mission critical for leading private banks in Switzerland. Reorganising back-offices and IT operations, establishing more centralised or mutualised service centres or even outsourcing certain non-core activities in order to optimise the operating models are on the agenda of the managed services banking platform. Visit our Managed Services page.

About the Centre and how Deloitte responds to the challenges

Centre of Excellence in Private Banking/Wealth Management Leader

Dr. Daniel Kobler

Dr. Daniel Kobler

Partner

Daniel is a partner at Monitor Deloitte and one of the leaders in Deloitte Switzerland’s banking practice where he is – among-st other roles - Deloitte Switzerland’s banking innovation leader. He has ... More

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