Private banks must boost digital presence or lose out
The number of wealthy individuals has reached record levels, but private banks must raise their game to match client expectations
Surging equity market and improving economies contributed to double digit growth in both population and wealth levels, according to the latest World Wealth Report by Capgemini and RBC Wealth Management.
The population of high net worth individuals (HNWIs), with investable assets of $1m (€740,000) or more, excluding their home, expanded by nearly 2m last year to reach a record high of 13.7m.
This marked a 15 per cent growth rate and the second largest increase since 2000. Similarly, HNW wealth grew by almost 14 per cent to reach $52.6tn, building on a strong five-year trend. Nearly 40 per cent of the current level of HNW wealth has been created in the past five years alone.
But private banking institutions need to tailor their offerings to better meet clients’ needs, if they want to serve this growing wealth. While trust and confidence in the wealth management industry rose significantly last year, HNWs gave their wealth managers lower performance ratings.
One way to address the evolving demands of current and future clients is “to move beyond simply having a digital presence to offering an integrated and seamless client experience that incorporates digital at all touch points,” says Jean Lassignardie, chief sales and marketing officer at CapGemini Global Financial Servicies. It is important that wealth managers recognise digital as a “truly disruptive force” in the industry and adapt their business models to meet client expectations, he says.
On the up
• At an annualised growth rate of 6.9 per cent, HNW wealth is expected to reach $64.3tn by 2016
• Asia-Pacific is forecast to have the largest HNW population by 2014 and the most wealth by 2015
• US, Japan, Germany and China accounted for nearly 70 per cent growth of HNW population last year and today make up around 60 per cent of global wealthy population, up from 58.4 per cent in both 2011 and 2012
Source: World Wealth Report 2014
This may be a challenge for private banks, which have long relied on more traditional forms of communication. But while in person interactions continue to prevail in wealth management, the margin of preference for them is slight, and expected to fade as the next generation gains prominence. Demand for digital is highest among HNWIs under 40, but the older generation is also demanding digital capabilities.
Almost two thirds of wealthy individuals say they expect their wealth management experience to be integrated across all channels, with HNWIs in emerging markets being especially demanding.
“Digital capabilities offer significant opportunities for wealth management firms to enhance their relationship with clients,” says George Lewis, group head, RBC Wealth Management, believing firms should prioritise their investments based on how clients want to engage with them.
“Private banking clients of all ages are becoming ever more accustomed to using technology in every aspect of their daily lives, and they will expect this engagement with their wealth managers through channels of their choice,” states Juan Gandarias, managing director of CaixaBank Private Banking.
“Private banks that do not integrate innovative technology into their service offering will ultimately risk losing customers,” he warns.
