Next Generation Private Banking: Unlocking the Fully Digital Advisory Journey Through Industrialization
Unlocking the Fully Digital Advisory Journey Through Industrialization
This paper illustrates the importance of industrialization from the point of view of providing a fully digital client advisory service. Synpulse has created a market radar of the current state of different industry players and made predictions about optimal operating models of banks in the future. The analysis measures the industrialization degree in the private wealth management sector in Asia and indicates a trend towards a digital client advisory proposition. We also define the target operating model in the industry and assign target states to different market participants depending on their current positions.
The private wealth management industry, predominated by private banks, is facing challenges such as tightening compliance, increasing operating costs and rising client expectations. At the same time, the emerging substitute services provided by large technology conglomerates pose a direct threat to banks. The keys to success will be to focus on innovation in not only value generating and differentiating areas, but also on rebuilding business infrastructure based on an agile operating model with high scalability.
Industrialization is characterized by the elimination of redundancies in the inter-bank and intra-band networks through localization and standardization of services at scale. Since banks’ operating models are not industrialized, the change-the-bank cost far exceeds the run-the-bank cost due to the scale of transformation needed. Banks should focus on their core business infrastructure and invest into digital capabilities, which will allow them to produce digital services that clients desire at a manageable cost. The back-end platform and the non-value generating operational processes could alternatively be bought as a service from strategic partners.
Through a centralized platform, industrialization can help private banks and other financial service firms to prepare for the future, where the «as-a-service» banking model becomes the new norm. Properly positioned and implemented, private banks can prioritize their resources on what really drives their businesses. Banking will become a service provided on a platform, offering any private banking or wealth management firm any specific service along the value chain. Its core is the collaboration with external partners to deliver the state-of-the art digital advisory journey with a human touch (figure 1 below), that the private banking clients are looking for.