- Private banks are struggling to meet the digital expectations of high net worth (HNW) investors due to legacy technology and infrastructure, according to Deloitte Luxembourg and wealth technology platform FNZ.
- By reviewing data from 30 global private banks with more than $5tr of client assets, the joint report identified additional challenges such as producing successful ‘hub and spoke’ operating models and keeping pace with technological advancements in data connectivity, artificial intelligence (AI) and advice ecosystems.
- The report suggests that end-to-end wealth management platforms, which combine tech, infrastructure and business process outsourcing, provide a strong solution and are becoming increasingly popular among private banks.
Deloitte Luxembourg and FNZ have collaborated on a report examining the pressures facing private banks. A prominent challenge is their struggle to offer a comprehensive digital experience that meets the expectations of high-net-worth (HNW) investors. In addition, private banks are being held back by a lack of technological leadership, agility, and economic resilience.
The report was compiled by analysing case data and public financial information from 30 global private banks, which collectively represent over $5tr in client assets. Beyond the digital capacity issues, it identified other substantial challenges. These include the practicalities of implementing successful onshore-offshore ‘hub and spoke’ operating models and keeping up with rapid advancements in AI, data connectivity, and advice ecosystems.
While private banks have begun to adopt various outsourcing models to address these problems, most have been primarily focused on IT infrastructure and application management. The report suggests a more effective approach would be to adopt end-to-end wealth management platforms. These platforms integrate technology, infrastructure, and business process outsourcing within a regulated institution, providing an all-in-one solution.
One key advantage of these comprehensive platforms is their appeal to private banks. Increased adoption of outsourcing has been recorded, driven by the potential to move from a high fixed-cost model to a more dynamic operational base. This shift allows banks to keep up with industry changes by accessing expert resources and updated technology.
By transitioning to an end-to-end wealth platform, private banks will be adopting a transformative approach. This strategy integrates technology and operations, including advanced APIs, data analytics, core banking, and digital solutions – all within a regulated financial institution. Such a platform promises greater resilience as well as the potential for scale and agility in a challenging environment.
