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As the World Economy Changes, Banks Focus on Relationships

Abridged from "Tapping into Business Opportunity: The Economics of Private Wealth Management"

By Vikram Gupta
Vice President, Private Wealth Management, i-flex solutions

The world economy is being reshaped by new technologies, services, and trading relationships. According to a report from Goldman Sachs, in less than 40 years, countries like Brazil, Russia, India, China, and South Africa could be larger than the G6 countries in terms of trade in dollar value. By the year 2025, they could account for more than half the G6 size.

This prosperity is contributing to the rise of wealthy, high net-worth (HNI) individuals, leading banks in these economies to consider expanding their offerings to include value-added private wealth management services to help retain customers, attract new ones, and improve loyalty.

Customers Expect More
While most banks already offer some form of private wealth management services, modern-day customers expect much more—including broader investment horizons, superlative returns, and a stake in the investment decision-making process. In order to meet such complex demands, the private banking industry needs solutions that address the prerequisites for successful wealth management—superior customer relationship management, financial planning, asset allocation, and comprehensive, yet easy-to-access portfolio analyses, alongside an expert understanding of risk.

In short, successful private wealth management today is defined by the bank's ability to innovate and offer differentiated services, in addition to playing the role of trustworthy advisers to customers. The question is how to do so without having to make large financial investments in hardware, middleware, and application software.

Banks Become Trusted Advisors
The solution need not be a monolithic entity, comprising complex modules that require time, effort, and financial investments to understand and use, but instead be an integrated, lightweight, quick-to-deploy, and easy-to-use solution.

The system should also be robust enough to deliver both self-directed and adviser-driven wealth management solutions to customers, while offering rich features such as multidimensional analysis, and expert and customized investment advice. It should not only help wealth managers develop investment, but also facilitate buying and selling. And it should include administrative features and give customers Web access to their portfolios.

Anchoring Relationships
In a dynamically changing investment scenario, the wealth manager and customer should be in constant collaboration, discussing and sharing plans and results in real time. Wealthy customers tend to use many financial institutions, but most consider one to be their primary partner.

What makes a bank a primary partner? It's not the number of products or the amount of assets the bank offers; it's the amount of time that the customer has been with the bank. And nothing locks in a customer better than consistently good service. The bank's goal should be to create deep relationships that lead to greater revenues per customer.

To find out more about wealth management solutions for the banking industry, read about i-flex solutions' FLEXCUBE Private Banking Suite.

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