The WEALTHTECH Book

3Digitizing Wealth Management Operations

Executive Summary

Wealth management operations is an area which touches all customer- and provider-related processes. In general, an “operating model” is an abstract representation of how an organization operates across process, organization and technology domains in order to accomplish its function. In contrast to a bank’s operating model, a bank’s business model describes how an organization creates, delivers and captures value for its clients and sustains itself in the process.¹ While business models consider revenues, costs and resulting profitability, operating models concentrate on costs as a primary objective that focuses on efficiency. In the cost category, personnel expenses represent the lion’s share and reflect the different situations regarding cost–income ratios, with approximately 80% in Switzerland, 70% in Germany, 60% in the USA, 50% in Sweden and Luxemburg, 40% in Singapore and Hong Kong, as well as 30% in China.² Besides employee costs that account for almost 60% of banks’ costs, IT costs are the second largest cost block at approximately 20%.³ In general, banks have the highest IT costs among all industries in relation to their revenue. Three trends characterize the developments towards new operating models for banks:⁴

• Increasing regulation. Many banks’ project portfolios are loaded with more than 50% of regulatory ...