The future of private banking and wealth management

Executive Summary

The current state of wealth management

The wealth management sector is currently facing headwinds, but also opportunities such as technological progress, price sensitive yet highly demanding High Net Worth Individuals, and rising compliance costs, to name but a few. FinTechs, BigTechs, large insurers and asset managers are entering the market with new, highly competitive solutions powered by big data analytics. Moreover, the recent speed of change will likely only increase over the years to come.

To be successful in the future, wealth management players must consider emerging trends and uncertainties early on, evaluate them thoroughly, and conclude on a sound strategy as well as making conscious choices. The key will be to begin preparing today, rather than ignoring the dynamics for now, thereby limiting options to only re-active measures at some point in the future.

While some trends are relatively predictable, others may open up unforeseen opportunities or create unexpected challenges. In order to deal with such uncertainties, Deloitte industry experts from Switzerland, Germany and the Center for the Long View developed four different scenarios for the future of wealth management jointly with executives from leading global private banks. The underlying scientific methodology included AI-powered trend analysis and extensive expert interviews.

Two key uncertainties were identified as drivers for the resulting scenarios: perceived value creation by the wealth management industry, and the level of technology enablement and adoption.

To the point:

• Wealth Managers are going through challenging times of change.
• Client demands, digitalization, competitive forces and regulation can be interpreted as threats but, at the same time, looked at as exciting opportunities.
• Depending on the degree of perceived value created by wealth managers and the extent of technological enablement, different industry scenarios are possible.
• While nobody knows for sure where the market will be in five or 10 years, participants can prepare their organizations by incorporating three major themes into their thinking: ‘segmentation creates value’, ‘client experience counts above all’, and ‘the power of ecosystems is to be leveraged’.
• Future successful industry champions will be those who interpret trends, structure and manage uncertainties, and filter the information to reach relevant conclusions – plus, most importantly, those who are brave enough to make conscious decisions.