Private banking transformation - Reinvented proposition for higher customer value, B2C and B2B
What trends are shaping the business
The recent financial crisis has led to a movement toward new and enhanced regulations as well as a push toward increased tax transparency aimed at protecting both the banking system and its clients. In addition, a combination of poor market performance and shifting client preferences is keeping the industry’s revenue base under pressure, forcing private banks to rethink their vision as well as their business and operating models while coping with constant profitability concerns.
In terms of revenues, Europe is still a rather lucrative market with private banks reaching pre-tax profit margins of 25 to 27 bps on average, compared with 18 to 21 bps of Asia-Pacific institutions. The emergence of new actors such as independent financial advisers, however, forces private banks to find new ways of making profits while keeping prices low. Luxembourg private banks, and private banks in developed countries more generally, have to optimize their value propositions in order to gain market share while focusing on cost efficiency.
Private banking business models in Luxembourg were established based on historical relationships, with value propositions capitalizing in particular on offshore status. Private banks focused on attracting assets, while keeping comfortable pricing models and achieving maximum excellence or efficiency was not seen as the utmost priority. However, the landscape has changed considerably in the past decade.
Inside magazine issue 9, June 2015
Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.
Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).