Global Finance’s inaugural Best Private Banks Awards highlight those firms that aim to serve their clients better through the innovative use of technology, new products and service models.
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RIDING THE RISING WEALTH TIDE
The forecasts for global growth in the wealth of high-net-worth individuals and families suggest a strong underpinning for the private banking industry. The number of millionaires is expected to rise to more than 16 million globally by next year, with Asia accounting for much of that increase.
The world’s wealthiest people continue to accumulate wealth at a fast pace, and they want the kind of all-in investment, wealth and tax-planning services that private banks offer. They want help managing the businesses they own, planning for family successions and structuring estates and philanthropic activities.
The rising tide, however, won’t lift all boats in the industry. Although demand for private banking services can be expected to rise consistently going forward, competition is fierce and operating margins have been squeezed significantly since the financial crisis. The regulatory and compliance costs for onshore and offshore private banks have risen dramatically in all jurisdictions, and the build-out of digital platforms to improve client service and business processes weighs heavily on private banks’ capital budgets.
Scale matters. There is still a place for boutique banks that can pull together the external resources and expertise needed to meet the complicated needs of very wealthy people. However, large private banks and the universal banks are intensely focused on improving their business processes and becoming more efficient.
The most successful banks have well-defined value propositions for different customer segments, and they maintain pricing discipline in serving those clients. There are plenty of opportunities for top-line growth in the industry, but realizing sustainable, profitable growth will be the challenge for private banks.
In developing Global Finance’s inaugural evaluation of the Best Private Banks in the world, we relied on the entry submissions of participating banks, public filings of banks, where available, and the perspectives of analysts focused on the industry. We looked for evidence of strong knowledge of local market conditions paired with expertise across global markets and asset classes.
Because performance metrics like returns on investment and customer segment profitability are rarely disclosed in the industry, we relied on the input of banking analysts and consultants with deeper knowledge of the market to assess operational excellence. Lastly, Global Finance sought out those banks that are innovating with technology and new products and service models that enable their relationship managers to serve their clients better.