Private Banking: Building a Culture of Excellence

Chapter 3

Finding the Right Organisation and Operational Strategy

A company that focuses on a single area of expertise is likely to be better at it than a company that divides its efforts among many different types of business. A standalone private bank is probably the best model in today’s business environment. A group that has private banking as just one focus among many others tends to be more complex; dealing with complexity takes time away from the most important activity in private banking—serving clients. It is possible to outsource some tasks to different providers, such as delivering specific types of products. At the same time, it is not possible to outsource all the main parts of the business. This is neither practical nor desirable.

To maintain quality, banks must be able to control all parts of the value chain, including the interfaces to external parties. These considerations form the basis for the discussion in this chapter.

ORGANISATIONAL FORMS AND TRENDS

The problems in the financial system that culminated in the collapse of some long-established banks and the near-collapse of many others in 2008 resulted in more than just monetary losses. For some banks, it marked the end of an era in which the prevailing mindset was often one of “bigger means better.” To its proponents, the benefits seemed obvious: take different business operations, such as investment banking, institutional asset management, private wealth management, and retail banking and combine them into ...