Private bankers’ high-tech hopes

Falling profitability has led to a renewed focus on the importance of business technology.

Pity those poor wealth managers. The 70s were never meant to happen again. But with the return of flared trousers, a looming Middle Eastern crisis and falling equity markets, the environment seems more than a little familiar. Their answer to this bleaker profitability picture? Cut costs, merge where necessary and invest in shared technology platforms. With forecasts revised sharply downwards, changes in ownership are inevitable in Europe. Rothschild’s funds division is up for sale. The first family of European high finance has finally decided to concentrate on private banking. Zurich subsidiary Threadneedle and AIB Govett, both top brands of their day, are also looking for new homes. Citigroup, which recently announced record profits, must now re-examine costs right across the bank after revelations about links with Enron have threatened its financial stability. Yet if these institutions are to succeed in the wealth management cauldron, they need to further clear the air. IT consultancy TCA Consulting has argued that institutions offering private banking services must promote clear communication between their technology and business development departments if they are to prosper. “The business view is that IT professionals overemphasise the importance of technology for the advancement of the business,” said TCA’s client director John Lawrence. The short-sightedness of this belief should be highlighted at the SIBOS conference in Geneva in October, where delegates will hear about the central role of technology in bringing together investment houses, custodians and distributors to promote free marketing of competitive fund products across European borders.