Lack of tech leadership, agility and economic resilience are holding many private banks back, according to Deloitte Luxembourg and wealth technology platform FNZ.
Deloitte and FNZ have collaborated on a report providing insight into the current private banking industry and how operating models have been evolving, along with the trends that are impacting the industry.
The Achieving Tech Leadership in Private Banking global report highlights the challenge private banks have in meeting the expectations of high-net-worth (HNW) investors for a sophisticated digital experience due to legacy technology and infrastructure.
By delving into case data and public financial data from 30 global private banks, representing more than $5trillion in client asset, the report outlines banking challenges, including:
- Meeting expectations for digital advice and relationship management
- Achieving practical success with the economics of onshore-offshore ‘hub and spoke’ operating models
- Keeping pace with technological advancements in data connectivity, artificial intelligence (AI), and advice ecosystems
While various outsourcing models have been partially adopted by the industry, the majority of these models
primarily focus on IT infrastructure and application management. The report suggests end-to-end wealth management platforms provide a strong way forward by combining technology, infrastructure and business process outsourcing, all within a regulated institution.
Outsourcing is becoming increasingly popular among private banks, according to Patrick Laurent, partner and innovation leader at Deloitte Luxembourg.
He said: “By transitioning from a high fixed-cost model to a more dynamic operational base, it is possible to boost agility and at the same time to access up-to-date expertise, technology and resources.”
Pascal Martino, partner and banking and human capital leader at Deloitte Luxembourg, also added: “Adopting a new end-to-end wealth platform, as described in our joint report, is a transformative approach that integrates technology and operations, including advanced APIs, data analytics, core banking, and digital solutions into one, all within a regulated financial institution.”
While Philippe Bongrand, FNZ MD private banking, said: “While opportunities exist, especially with AI, banks are suffering from too many complexities. What we show with this report is that piecemeal outsourcing isn’t very effective, but full end-to-end platforms make sense for private banks who want to combine scale and agility in a much more resilient and regulated way.”