Market Overview Wealth Management & Private Banking
The Wealth Management (WM) & Private Banking (PB) industry over the last decade and especially post-pandemic has changed the way wealth managers serve their clients.
Global asset prices that declined during the pandemic period grew by ~11% in 2020. As the economy is gradually picking up, the wealth management client asset inflows are witnessing an increase. Globally, the WM/PB industry is largely fragmented. While large banks make up for a small share in the market, small and mid-sized banks make up for a larger share (primarily European and Swiss-based private banks). The total value of assets under management registered $6.3 trillion in 2020 (IBSI Research). The number of HNWIs has been highest in North America (7 million), followed by Asia-Pacific (6.9 million) and Europe (5.4 million).
In the pursuit of achieving growth, some of the leading wealth managers are considering redesigning the pricing.
model. The traditional assets under management (AUM)- based fee model is being disrupted by new pricing strategies, such as the fee-for-service model. Although reconfiguring a pricing strategy is in its early stage, banks will no doubt need to sharpen their focus on an approach in this revenue-critical area.
Tier-1 banks are emphasising investing in digital offerings to attract mass affluent clients and remain competitive. However, Tier 2-3 banks need to accentuate technology innovations to develop full-service multi-asset class solutions. The key is to define digitised services to drive revenues in the sustained low-interest-rate environment.
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