Private Banking: Building a Culture of Excellence

Chapter 2

What Is Driving Private Banking?

There are numerous forces at work shaping the private banking industry. Market volatility following the financial crisis of 2008 has led to a demand for simpler, more transparent types of investments among clients. Regulatory matters are also affecting the business. Concerns about the safety and soundness of banks have increased the pressure for stricter regulations to protect clients and to ensure that banks are adequately capitalised. As for clients, growth in nontraditional markets along with a shift taking place as a new generation takes over wealth planning also have affected how the business develops.

Competition, too, is undergoing change. Today’s competitor is no longer interested only in clients but also in securing the necessary talent to serve these clients in a market in which demand for relationship managers has increased. Where capital is concerned, banks that can demonstrate that they are able to exceed regulatory minimum requirements are at an advantage. Those that lack capital or the size necessary to compete in new markets are likely to join a wave of consolidation already underway in the industry.

How these forces together are shaping the industry makes private banking both exciting and challenging. The clock cannot be turned back. Private banks must accept that the world is changing and must seek to adapt. This chapter explores the issues that are critical for an understanding of how the industry will evolve in the ...