How Banks Can Leverage Wealth Management Platforms To Drive Shareholder Value

By David James and Olivier Kyc

While interest rates have risen in recent years, bank valuations have stayed critically low with a 56% discount to the broader market[1]. As a result, some incumbents are under significant pressure from their shareholders for in-depth restructuring of their businesses[2] or have become targets for acquisition[3].

This gap started in 2008 and persisted due to the market’s sentiment on reduced growth opportunities, especially for banks in Europe, and a high-cost structure[4]. To return increased value to shareholders, leading retail banks have sought growth avenues through new business models[5] and enhanced their focus on wealth management[6].

This article examines the latest business models, wealth management opportunities and practical strategies for implementation.

What are the new business models in retail banking?

During the pandemic, customer preferences evolved rapidly. 86% of customers stated they trusted big tech companies, as much as incumbents, to meet their financial needs[7]. Their desire for the best customer experience led to increased testing of fintech and digital banks that offer frictionless, mobile first-experiences, with low and transparent costs, and automated efficiencies.

In response, retail banks shifted focus from product to experience, with leaders adopting new business models that leverage ecosystems to create new, higher-margin, lower-cost cash flows. Everyday banking, wealth management, lending and Banking as a Service are the main new models that have emerged. The segment with the highest potential in Asia is wealth management, with a huge market projected at USD 811.5bn in 2030[8], and a CAGR of 12.7% between 2021-2030. This model also offers additional sources of high margin revenues and is less capital-intensive due to digitalisation.

What’s the opportunity in wealth management?

The opportunity is driven by wealth creation, particularly in Asia, where clients are seeking wealth products for inflation protection, new opportunities in uncertain environments and geographic diversification.

Customers prefer a hybrid interaction model: human interaction for sophisticated products[9], and mobile interaction for routine service,and the use of simple products and transactions.

Further, geopolitical tensions and decoupling are causing many high-net-worth individuals and large numbers of affluent Chinese to look to Singapore, forcing banks to develop regional client propositions.[10]

Lastly, Hong Kong, Singapore and Shenzhen regulators have introduced new policies and incentives to develop regional wealth centres. Recently, Shenzhen’s local financial regulator[11] launched an initiative to build a USD 4.5 trillion wealth management industry by 2025, aiming to attract 100 institutions and 300 investors.

What should retail banks do to successfully launch a wealth management platform?

Based on our experience, we recommend the following strategies for retail banks:

  1. Leverage technology as customer experience enablers. This will enable user-friendly yet sophisticated digital products, such as robo-advisory and personal financial planning; unlock personalised advice and information; and offer entertainment or gamification. Coupled with customer research, user testing and Net Promoter Score metrics, retail banks can create tailored propositions for strategic segments. Furthermore, AI-powered analytics technologies in contact centres can provide customer satisfaction across millions of calls.
  2. Use technology as productivity enablers for wealth managers. Technology will help automate repetitive tasks. This will free up wealth managers’ time, allowing them to spend more time with clients. AI can also help wealth managers deliver higher-quality interactions, with personalised product recommendations and curated content. These technologies require a modern tech stack with strong cloud capabilities, with some incumbents moving more than 90% of their applications to cloud.
  3. Adopt a scaled-agile operating model to sustain customer experience improvements. Cross-functional, agile teams will be empowered to plan, execute and rapidly deliver new propositions that are fully aligned with the organisation’s objectives and customer needs. A talent strategy should complement this change to create a diverse and creative employee base. A leading bank implemented the SAFe framework in 2020, resulting in future-proof products, improved customer experience with higher Appstore ratings and faster decision-making.

Embracing these news ways of working will help boost your banks’ valuations. It’s therefore increasingly important to focus on managing wealth, define forward-looking digital propositions, and enhance your tech stack with AI and cloud.

Find out more about Protiviti’s asset and wealth management services here.

About the authors

David James is a Protiviti Hong Kong managing director with over 30 years’ experience in business performance improvement. He’s worked in wealth management and process optimisation across financial services, supplier management, global resourcing, operations, third party risk management, and transformation. His prior experience at HSBC saw him play a lead role globally in defining and translating business requirements into local, standard, executable services.

Olivier Kyc is a Protiviti Hong Kong associate director with more than 15 years’ experience in designing and implementing digital strategies for large multinational corporations. He specialises in financial services across wealth management, retail banking and insurance, and is an expert in digital and customer strategy, target operating models, financial analysis and project management. His passionate for innovation has helped clients revamp journeys using new technologies and designing award-winning user interfaces.

[1] https://www.investopedia.com/ask/answers/040815/what-average-pricetobook-ratio-bank.asp#:~:text=The%20average%20P%2FB%20ratio,on%20a%20per%2Dshare%20basis.

[2] https://www.ft.com/content/dd6051ca-b5d5-4198-80e9-035ca7f7e6ff

[3] https://www.ft.com/content/77c5e742-fc3c-4fdd-a5d1-96865e5cccb9

[4] https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review

[5] https://www.ubs.com/global/en/media/display-page-ndp/en-20221026-launches-digital-wm-platform.html

[6] https://www.about.hsbc.com.hk/-/media/hong-kong/en/news-and-media/210809-hsbcs-asian-wealth-business-maintains-strong-growth-momentum-en.pdf

[7] https://finance.yahoo.com/news/70-hong-kong-banking-customers-020000901.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAL3mc_9OIGGDRAMKYYqkYDjPUzYQIuXohG5faF6IEtjMHu8TPxSCwuHmvY25KltzLw_gnJJ7cHd1VHgZFSdhl6HNprQQslpDEgd4urLABf1dCwbDlUwx8yK57YNFZJF23zrjAjOLXrFgqXv_fpI_d1sJKyqgpBwuAQavvZqkNrFm

[8] https://www.globenewswire.com/en/news-release/2022/05/31/2452876/0/en/Asia-Pacific-Wealth-Management-Market-Is-Expected-to-Reach-811-5-Billion-by-2030-Allied-Market-Research.html

[9] https://www.globenewswire.com/en/news-release/2022/05/31/2452876/0/en/Asia-Pacific-Wealth-Management-Market-Is-Expected-to-Reach-811-5-Billion-by-2030-Allied-Market-Research.html

[10] https://www.ft.com/content/62845c24-1e45-483c-95d1-b2c5d4c07337

[11] https://www.caproasia.com/2023/01/14/china-shenzhen-targets-4-2-trillion-wealth-management-industry-by-2025-100-strong-wealth-management-institutions-300-pilot-qualified-domestic-foreign-investors/

Shopping Cart

Media Kit

    Data Protection

    Personal Data (“Data”) submitted for Media Kit (“Media Kit”), and/or collected in the form of first name, last name, email address and other contact details may be used for the purposes of inviting you to future events and for reaching out to you with content which may be of interest to you. For these purposes, The Digital Banker will share the Data with our associate companies (including event and content sponsors) to promote their products and services. You will also be automatically subscribed as a user on www.thedigitalbanker.com. If you would like to opt-out, email us at [email protected].

    By clicking Submit, you acknowledge that you consent/ have sufficient informed consent to the collection, use and disclosure of Data as set out above.

    The Digital Banker Summit

    Moving on from FTX: is 2023 the year of CBDCs?

    Indonesia, Jakarta

    Thailand, Bangkok

    Philippines, Manila

    Contact Us

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Request Nomination Pack

        Data Protection

        The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

        Registration Form

          Data Protection

          The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

          Registration Form

            Data Protection

            The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

            Registration Form

              Data Protection

              The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

              Registration Form

                Data Protection

                The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                Registration Form

                  Data Protection

                  The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                  The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

                  COVID-19
                  Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

                  Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

                  The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

                  Request Nomination Pack

                  Error: Contact form not found.