European Wealth and Private Banking Industry Survey 2005

Last year, the financial markets continued their recovery from the recent bear market that had affected the private banking sector profitability and growth. Despite measured market recovery, clients still remained cautious, reflecting the historical losses they had experienced and a recognition that more normalised returns were expected from equities in the future. There also remained issues of broader corporate governance concerns and, within the private banking industry specifically, the need to rebuild trust between providers and their clients following public court cases concerned with conflicts of interest.

Despite measured market recovery, the private banking sector now faces two new major challenges. First, achieving top line revenue growth and improving the overall client experience is now back on the senior management agenda after a period of cost containment. Second, ensuring a more agile and cost effective operational platform is now a greater challenge as it needs to address both the increasing complexity of changing regulation and the evolution of new products and services.

Slowly, but surely, the combination of market, client, competitive and regulatory trends are leading to an environment that will look radically different in 2010. To meet the challenges and succeed in this evolving environment, which senior leadership teams believe will be far less predictable than in the past, private banks must focus their attention on their growth and operating challenges and execute well. No longer will reactive and uninformed responses be enough to succeed in these more difficult conditions as returns from market cyclical growth will not be enough to raise everyone’s performance. Management must therefore move boldly to tackle these evolving challenges and renew their organisations for growth and agility.