MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Posts Tagged ‘private banking’

Agile Innovation in Wealth Management

Tuesday, January 16th, 2018

In our most recent report Innovation for Wealth Management our analysts are looking at different - successful and less successful - approaches for innovation in the private banking industry. The relatively new trend of Agile Innovation has not yet found many  followers within wealth management but it is worth a deeper look. The main benefits of Agile Innovation techniques are the breaking down of silos within an organization and the rapid development cycles which quickly lead to a real world test of a new product or service, or just a little new feature. The risk of huge sunk costs and bad technology investments is reduced. There is some evidence that Agile Innovation can significantly improve the success rate of innovation projects. Some surveys report a success rate of more than 60% of projects. However, these numbers should be taken with some caution as every new fashionable management technique runs the risk of being overhyped.

Looking at the banking and wealth management industry we also find some examples of Agile Innovation. German Fidor Bank, Dutch ING Bank and Scandinavian Nordea are among the champions of Agile Innovation in the banking industry. All of these initiatives are focusing on retail banking or transaction banking. It is striking that we could not identify even one wealth manager or private bank that is running an Agile Innovation project. This may be due to the greater secrecy among innovation projects in the private banking space. However, we fear that it is also due to the strong anti-agility attitude we are still seeing in the wealth management industry.

While Agile Innovation may have reminded some seasoned managers of other management fads they have seen come and go, we believe that it in fact does address critical shortcomings in the innovation cycle of wealth managers:

<  Innovation is cross-functional and not boxed in somewhere deep within the organization.

<  Creating customer value is the core of innovation.

<  Real customer feedback is the measuring stick for any new feature, product or service, rather than endlessly debating risks and opportunities.

<  Innovation is rapid, feedback is rapid and success will come quickly.

Agile Innovation is not the silver bullet for all innovation projects. And of course, there are constraints in banking, like regulation, that make some things impossible or slow them down. But it is a promising path that brings tangible results instead of lofty dreams. Linking Agile Innovation to a sound strategic process where goals and overall directions are clearly prescribed is therefore a good prescription for successful innovation.

Check out our new report on Innovation for Wealth Management.


Wealthy and affluent self-directed investors: how wealth managers can win them back

Friday, December 15th, 2017

The popularity of the self-directed investment mandate has been growing rapidly since the 2008 financial crisis and shows no signs of slowing down. We estimate that, in 2017, self-directed investors (SDIs) made up just under a third of HNW AuMs-or around USD 20 trillion.This continuing development poses a clear threat for private banks and wealth managers and, unless established institutions change their strategies, will represent one of the largest disruptive trends of the next five years.

This MyPrivateBanking report analyzes how the HNW self-directed market has developed and how it will continue to do so. The analysis includes comprehensive profiling of the HNW self-directed investor based on a panel survey of around 240 HNW investors from five countries. We draw on behavioral economic research and current quantitative data to forecast the most likely development of the SDI market under different scenarios. The report also examines the supply side of the SDI market, including detailed case studies and competitor analysis of the most notable players in the online brokerage sector.


This report estimates the rates of growth of AuM in the SDI mandate among HNWIs for the next five years under four different scenarios using current and past data on HNW SDIs: Conservative Baseline Scenario, Continued Bull Market Scenario, Market Volatility Scenario, and Bear Market Scenario. These estimations allow for a concrete assessment of how much of a threat the SDI mandate is for established banks and wealth managers under different market circumstances and ideas on how to plan accordingly for each outcome.

Competitor Analysis

This report describes the digital products and tools that are table stakes for self-directed investors, as well as those tools that, although not yet a “must have”, represent a way to get a foot up in the current market. Four detailed case studies on the leading standalone discount brokers with dedicated offers for HNW SDIs provide an inside look at how these actors are taking aim at a client segment that has been, until recently, loyal to traditional wealth management firms. Three further case studies examine three universal banks who have developed specific SDI strategies for HNW clients.

Strategic Recommendations

Based on the quantitative data obtained from a pool of these investors, findings on these investors’ behavior derived from behavioral economics, a five-year forecast for the SDI mandate, and the case studies detailing the most outstanding practices of leading institutions in SDI services, this report arrives to a list of concise, straight-to-the-point, and actionable recommendations. Our report provides wealth professionals with the necessary tools to devise a strategy to counter the threat from online brokers

The report includes cases studies on the following banks and brokers: Capital One Investing, Investec, Westpac Australia Private Banking, Consorsbank, E*Trade, Interactive Brokers, and Swissquote


Vague about vaults

Friday, March 14th, 2014

(by Francis Groves, Senior Analyst)

In MyPrivateBanking’s latest report, ‘Mobile Apps for Financial Advisors‘, 9 of the 14 vendors covered told us that they provided private banks/wealth manager with some form of electronic vault functionality for use in conjunction with their advisor apps. We believe that this is an encouraging level of provision in this area but there is undoubtedly a lot more that could be done in this area to help advisors/relationship managers and their clients. Moreover, the document handling/electronic vault/secure mailbox sector is full of ambiguity and confusing terminology.

Our focus is chiefly on wealth management clients and their requirements but banks themselves can also be purchasers of electronic vault facilities, as remote back-up services, increasingly cloud-based. Of course, there is likely to be some overlap with the vault facilities that the banks themselves provide for their private clients but it adds to the confusion. On top of that, some service providers and industry specialists use alternative terms such as a ‘digital vault’ or an ‘Internet data safe’, not to mention brand names such as SmartVault, a US provider specialising in vault solutions mainly for accounting purposes.

More serious than the confusion over terms, is the lack of clarity over the details of these client vault services. For example, is it good practice to use the client’s digital vault for posting mail (and documents) as well as for longer term storage? If a relationship manager can put things into their client’s digital vault, can they also retrieve them if, say, they made a mistake and put another client’s documents there by mistake? Presumably, the client’s digital vault requires backing-up, so how quickly would the client have access to that in a disaster recovery situation?

It looks as if private banks and wealth managers are only just beginning to understand the importance of client vault facilities to their overall offering to their clients. Banks face decisions about whether to offer vault services as a way of differentiating their private banking services from their retail ones or whether to use the offer of a digital vault for clients as an incentive for paperless banking. Another area of uncertainty is the extent to which banks should allow clients to store other non-bank related documents, such as electronic copies of wills or deeds of ownership to mention just two, in their digital vault. Providing clients with a secure vault could well become a key way for private banks to ensure they remain (or become) a wealth client’s most important provider of professional services rather than the client’s lawyer or accountant, who may be able to offer their own digital vault service.

Private banks need to give clear messages about what their client digital vault facility can be used for, how secure it is (and whether this security provision is different from that for other banking services), the client’s responsibilities for keeping it secure and who has access to it, both for depositing documents and withdrawing them.


MyPrivateBanking speaks on Mobile Apps at the PrivateBanking Summit 2012

Friday, September 21st, 2012

Our head of research, Steffen Binder, was invited to present our research on the impact of the mobile revolution for wealth management and private banking at the Euroforum Private Banking Summit 2012 in Zurich. He joined a panel discussion together with Credit Suisse’s private banking head in Switzerland and received lots of applause from the audience - which seemed particularly surprised to learn of the already high usage of mobile apps by the wealthy across the globe. We still don’t feel that mobile apps are as high on the agenda of private bankers as they should be – but are sure it will be soon. At least for those banks that aspire to grow their business with the wealthy in the next 5 to 10 years.

We offer members of the MyPrivatebanking Research Community the main charts on the trends, usage numbers, best practices and conclusions for free. Please click here for the slides. Of course, the best presentation still needs a speaker and we recognize that this presentation is incomplete without oral commentary. But we think it still provides great insights and data.

Steffen Binder speaks at Private Banking Summit

Steffen Binder speaks at Private Banking Summit


The Arab Revolution and What It Means for Private Banks

Friday, February 4th, 2011

Just want to let you know that we are working on a research paper on this topic which is due mid next week. So, stay tuned. If you are interested to receive the press release please sign-up here.


Financial Times Quotes MyPrivateBanking on Anti-Kick-Back-Initiatives

Monday, December 6th, 2010

The Financial Times is quoting MyPrivateBanking’s research director on how kick-backs are on the (slow) retreat in Europa. Frequently, fund sponsors and other financial product providers are paying kick-backs or commissions to private banks and wealth managers when they sell their products to clients. This happens often without disclosing the commission to the private banks’ or wealth managers’ client:

But as in the UK and US, the European Commission and some national governments on the continent are laying track for more consumer and investor protection measures. “That’s a big force - not directly for fee-based consulting, but for more transparency, more disclosures, more fairness, whatever that might be,” Mr Binder says. “There are a number of regulatory initiatives right now - where banks have to disclose the ‘kickbacks’ from fund firms and fund sponsors, for example - that will have the effect at the end of day for more consulting to look like fee-based consulting.”

MyPrivateBanking has just released a report on fee-only financial advice in Germany.


Video-Interview on our Social Media Report

Friday, November 19th, 2010

In an interview with the leading Swiss paper NZZ our Research Director Steffen Binder presents (in German) the results of the latest MyPrivateBanking report “Wealth Management and Social Media.

Click here the see the full interview.



Why wealth managers don’t care about social media…

Friday, November 5th, 2010

…the majority probably thinks Facebook is for their sons and daughters to chat with their highschool buddies. WRONG! Read all about it.


Reality Check on Proposed Asset Allocations

Thursday, November 26th, 2009

The most disturbing finding during our mystery shopping tour in the beginning of the year was that the proposed asset allocation varied extremely: We were stunned on how different the private banks our test clients visited reacted to one and the same story. Ok. We were at the heights of the crisis, but still the variance in the asset allocation was breath taking – especially in the equity portion: We got everything from a little more than zero percent in stocks to 95 percent. Inspite all the prevalent doomsday scenarios at this time we regarded the equity portion of most proposals as far to low, given the investment horizon and risk appetite of our test client. The last months proved our judgement: Just imagine how much the value of a portfolio with no stocks vs. almost all stocks will differ now ! Never forget: The choice of your adviser can be the most expensive or profitable decision in your investment life, so always take your time and shop round.


Surprising Experiences When Looking for a Private Banker

Monday, September 28th, 2009

In our recent “Survey of Top European Private Banks” we were surprised about some of the respones and feedback we got during and after our visits with the advisers. Our favorites:

Blunt honesty: In two cases the advisers made pretty clear that they feel ok with their current employer, but neither could honestly tell the client who will own the bank two months from now nor what a change in ownership would mean for the client and his portfolio. Thumbs-up for honest answers.

Vast differences in size of proposals: From a one pager to a 47 page compendium. In respect to the proposal sizes private banks really differ.

Language mix-ups: We came across one company website that is only available in French and another that is offered in English, French and Italian, but not in German – the language with the largest population in Switzerland and Europe. But what really puzzled us was the one proposal written in an unclear mix of English and French. Maybe impressive on a restaurant menu, but certainly not for a client.

Madoff madness: The adviser of one major player promised to mail us the proposal once his bank has sorted out the “Madoff Mess”. Well, Mr. Madoff is waiting for his trial and we are still waiting for the proposal. The adviser of another bank that got heavily hit by the Madoff fraught just shrugged when asked about the consequences for the bank. He gave the trust winning comment: “No worries. The bank is not affected. It is only client’s assets”.

Have you had any strange experiences when talking with a private banker for the first time ?