Eric Barnett, CEO of Societe Generale Private Banking Hambros, comments on the past year and the trends that are likely to evolve in 2016
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The wealth management industry is constantly evolving, this year we have seen clear developments both at a business and client level. From the increased use of digital, resulting in investments throughout the bank, to a renewed focus on both our regional and international capabilities and services for our HNWI clients, 2015 has been a year of challenges and opportunities that will shape tomorrow’s wealth management industry.
Ongoing challenges in the industry continue with the increased need to keep pace with numerous important regulatory developments, which are also driving changes within the competitive market place itself. This month we have seen the opening of the FCA consultation on MIFID II which will continue through to next year.
In addition the imposed shift to global tax transparency for clients is also a significant cost for the industry and will doubtlessly impact clients in the short term as they grapple with the complexity of new reporting regimes.
Private banks should continue to adapt their risk appetite both in terms of client segments and geographies with whom they are prepared to work and this is driving a number of ‘big’ strategic decisions as well as consolidation.
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By GlobalDataFurthermore, cost of regulation combined with a low-interest environment will continue to put pressure on net margin and ROE and should reinforce this trend. Maintaining critical size in all current markets will be a challenge for most institutions.
On the digital side, changing rules and evolving client habits have called for increased quality and speed of reporting through digital initiatives, requiring private banks to focus on operational efficiency and differentiation through technology. We find that our international clients increasingly want to access key information including investment knowledge and expertise in a timely manner while on the go and abroad.
2016 looks to continue in line with these trends. With the rise of digital, clients preferences and expectations for the way they interact with their private bank has changed forever and the industry will have to adjust and keep up with this. Providing easy access to product and services, anywhere, anytime is an important requirement for our clients but we see this as a balance with the importance of human interaction with our client relationship managers and investment advisers.
In 2014 SGPB Hambros launched its ambitious three-year transformation program in response to the technological environment which will form the backbone of tomorrow’s private bank.
Despite the importance of technology for SGPB Hambros clients, relationship management has remained at the heart of our business and a key element of our success in 2015, hence our commitment to developing our regional branches across the UK. With SGPB now located in a number of international finance centres and a string of networks across Europe including UK, the Channel Islands, Gibraltar, France, Belgium, Luxembourg, Monaco and Switzerland, we are now well positioned to access key international markets in Russia, Middle East and Africa to service the specific needs of HNWIs with a local feel.
From a client perspective, we see a growing interest from HNW families on succession and the sustainability of their wealth for the long term. Equally a large number of HNWIs are focussing more time, effort and money in the charity and philanthropy space. We expect this trend to continue in 2016.
The threat to private banking is to miss the boat and risk being left behind by competitors who are more efficient at adapting their model to new client trends.
Increasing regulatory requirements, increasing client demands and increased competition mean that continued client service excellence, combined with operational efficiency and differentiation through technology will continue to be key elements of success for 2016 and beyond. Private banking is an exciting, demanding and rewarding industry and one which SGPB Hambros remains excited to be part of.
Eric Barnett, CEO of Societe Generale Private Banking Hambros
