Navigating to tomorrow: serving clients and creating value Global Private Banking and Wealth Management Report 2013

Transcription

1 Navigating to tomorrow: serving clients and creating value Global Private Banking and Wealth Management Report 2013 Hong Kong Launch 6 September 2013

2 A unique vantage point on private banking over a 20 year history

3 Is Asian private banking due for a reboot? Key highlights from Asia 3

4 Unanimous agreement about the state of the industry Fragmented 100% More competitive Pressure on margin Need to be solutions-driven Change is needed 4

5 Key themes Traditional approaches to product and service provision are changing Understanding the client s perspective of value is getting tougher Quest for operational efficiency and differentiation through technology Regulatory pressures driving cultural change 5

6 Traditional approaches to product and service provision are changing

7 Revenues are down across the board, but still remain higher than the rest of the world 35% 32% 30% 25% 23% 21% 20% 15% 17% 14% 15% 10% 5% 0% SG / HK GLOBAL 7

8 Reshaping the face of wealth management Business model and focus Broader financial planning and wealth solutions advice across banking, investment management, retirement, Discretionary investment/portfolio management Product/Service Brokerage trading and execution Non-discretionary investment advisory managed Non-discretionary active investment advisory dealing Fund Distribution Banking and Cash management Institutional Asset Management Now In 2 years 0% 10% 20% 30% 40% 50% 60% 70% 8

9 Will clients really pay management and advisory fees? Client willingness to pay for services now and in 2 years Custody and administration fees Transaction services Advisory transaction fees and commissions Discretionary management fees - Ongoing Advisory management fees Ongoing Discretionary management fees All in one fee Financial planning advice Discretionary management fees Initial set up Now In 2 years Advisory management fees Initial set up 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 9

10 Understanding the client s perspective of value is getting tougher

11 Do clients actually perceive tangible differentiation among private banks? Banks who think so... 28% 11

12 On average, women represent about 32% of clients today But only 12% of private banks consider gender in segmenting their client base 12

13 Too much is still being lost upon wealth transfer, through death or generation Percentage of a client s wealth assets typically retained from their surviving spouse, children and foundations 69% 52% 50% Surviving spouse Children Charitable foundation 13

14 Understand the client s needs and tailored client service Degree of satisfaction with current offering Meeting the dynamic and changing wealth management needs of female clients across their lifetime Meeting the wealth management challenges of individuals with disabilities and/or long term care needs Provision of global tax planning and advice Helping responsible parties fund educational provisioning for their children Establishing the appropriate fiduciary structures for minors Business support including transition funding and succession planning Servicing the changing needs of retiring baby boomers Not satisfied Medium satisfaction Highly satisfied 0% 20% 40% 60% 80% 100% 120% 14

15 The trends on client testing/ research activities Now In 2 years 7% 7% 8% 15% 43% 8% 43% 69% Very limited/negligible client testing undertaken. Client research restricted to client satisfaction surveys Basic client testing/research activities undertaken as part of new product/proposition development process. Typically involves focus groups/qualitative testing Some ad-hoc client testing undertaken for some product/proposition launches Advanced client testing/research activities consistently undertaken as part of new product/proposition development using both qualitative techniques and rigorous quantitative analyses 15

16 Quest for operational efficiency and differentiation through technology

17 Costs have stabilised, but further reduction will be challenging Average Cost-Income Ratio: Singapore and Hong Kong 120% 100% 80% 94% 97% 82% 83% 76% 73% 60% 40% 20% 0% Expected 2013 Forecast 2014 Cost-Income Ratio 17

18 Your greatest asset remains your greatest cost Cost composition, by function: Singapore and Hong Kong 100% 90% 80% 70% 11% 8% 9% 9% 11% 12% 12% 12% 12% 60% 50% 40% 30% 20% 10% 15% 53% 21% 18% 47% 49% 0% Forecast 2013 Front Office/Relationship Management Middle/Back Office Other Support Services (e.g. HR, Legal, etc.) Products and Services 18

19 CRM time for proactive contact with new and existing clients has decreased 100% 90% 80% 70% 60% Client facing time reduces from 57% to 46% 50% 40% 30% 20% 10% 0% Significantly more time fact-finding and profiling Internal administration Portfolio construction and management Client management Fact-find, risk profiling and onboarding Proactive contact with existing clients Marketing and prospecting 19

20 Technology use has yet to be optimised to good effect Top 5 operations and technology challenges - now and in two years time 1 Too many manual processes 1 Lack of client oriented e-business applications 2 Not enough use of technology functionality by CRMs 2 Too many manual processes 3 Better alignment of IT with business priorities 3 No online statement capabilities / too many paper statements 4 Providing aggregated client reporting 4 Not enough use of technology functionality by CRMs 5 Data management and security 5 Data management and security 20

21 Is mobile technology and on-line alternatives taking off fast enough? Mode of interaction with clients Telephone In person Internet based Paper Internet / website based Mobile technologies/pdas/tablets/pagers Video Conference/Skype/GTM Now In 2 years Social Network 0% 20% 40% 60% 80% 100% 21

22 Top Technology Investment Priorities Today and Tomorrow Enhancing CRM tools to support advisors Regulatory i.e. KYC, AML, FATCA etc Trade execution Mobile computing, social networks, tablet, notebook support Providing client internet reporting Improving process automation Enhancing client data security and protection Consolidating/ rationalising assets across multiple investment platform Firms are responding to the challenge and increasing budgets to facilitate the transfer of information any time, any place, and via the device of one s choosing 22 Now In 2 years

23 Regulatory pressures driving cultural change

24 Compliance in the driving seat Top 5 areas of risk faced now and in two years time 1 Compliance 1 Client and product suitability 2 Client and product suitability 2 Compliance 3 Front to back operational processing 3 Front to back operational processing 4 Client data protection 4 Strategic industry and business events 5 Ensuring effective controls 5 Internal and external fraud 24

25 Crystal ball = a necessary compliance toolkit? Top 5 regulatory and compliance issues in 2 years time Anticipating and managing increasing regulatory requirements Anti-Money Laundering Advice and Product Suitability FATCA More regulatory convergence across borders Rank 25

26 The going to get tougher 94% The number of private banks who believe that crossborder banking regulation and greater tax transparency will increase in risk 26

27 A water-tight offshore strategy which does not expose the client and organisation to risk Top 5 markets for targeting new clients/aum next 2 years China Onshore Offshore Both Indonesia 0% 88% 12% Hong Kong 0% 86% 14% Singapore 57% 14% 29% Rank 33% 17% 50% 27

28 Bring about cultural change with your greatest asset or it will become your liability Top 5 people risks Employees being non-compliant with regulations (intentionally or mistakenly) Reward strategy not aligned to business strategy Quality of staff Retention of talent Effectiveness and productivity of sales and CRM Rank 28

29 Steps taken in order to meet the increased regulatory and compliance obligation Top 5 steps taken 1 Enhancing Front Office controls 2 Undertaking product and services training 3 Strengthening compliance procedure manuals 4 Undertaking front office training 5 Raising the issue of suitability and appropriateness with clients 29

30 Conclusion

31 Playing by the rules, and winning Build compliance into the culture and mindset Segment strategically Get up the tech curve quickly Transform tradition approach on products 31

32 2013 PricewaterhouseCoopers Limited. All rights reserved. refers to the China or Hong Kong member firm, and may sometimes refer to the network. Each member firm is a separate legal entity. Please see for further details.