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Basic: Private banking
- 1. Private Banking 01 01 PRIVATE BANKING | APRIL 2020 MIGOM BANK | APRIL 2020
- 2. 02 02 Presentation Highlights Executive summary Private Banking Wealth Pyramid Wealth segmentation of PB customers Source of Wealth Why PB - customer perspective Why PB - Bank perspective Myths|PB Relationship Manager No. of customers serviced Relationship Years Assessment|PB manager PB| Productivity Regulatory challenge to PB Our products & services PRIVATE BANKING | APRIL 2020
- 3. Executive summary Private banking provides investment-related advice and aims to address the entire financial circumstances of each client. Private banking services typically aid clients in protecting and maintaining their assets. Employees designated to aid each client work to provide individualized financing solutions. These employees also help clients plan and save for their retirement and structure plans for passing accumulated wealth on to family members or other indicated beneficiaries. PRIVATE BANKING | APRIL 2020 03
- 4. Private Banking - REGULATORY DEFINITION Maintain personalized relationship Receive personalized banking services Minimum USD 1 mln liquid assets under the bank's management or; minimum USD 3 mln liquid assets - OPERATIONAL DEFINITION A Relationship Manager establishes the tight connection to conduct banking transactions for the customer PRIVATEBANKING|APRIL2020
- 6. Wealth segmentation of PB customers 06 - Increasing number of HNWIs and UHNWIs - Clients focus on simple, secure, liquid, short-term products that deliver predictable outcomes. - Less need for trading or structured products, except in the case of UHNWIs. - Political system means that clients strongly favor offshore banking, with Switzerland and the UK as the preferred offshore hubs
- 7. Source of Wealth 07 Average age of UHNWI by country
- 8. Why PB - customers perspective - HNWIs have too much money - Safety custodian of wealth - Protection against inflation - Capital appreciation - Tax avoidance and/or deferral -Estate Planning -Social Status 08
- 9. Why PB - bank's perspective? 09 It leads to PROFIT
- 10. Why PB - bank's perspective? 10 Good profit = Higher income - Lower cost Low regulatory requirements Business referral from PB customers
- 11. PB - INCOME/BUSINESS MODEL 11 - Commissions -Management fee -Custodian fee -Loan interests -Other service charges
- 12. MYTHS|PB sector 12 Myth #1: There will be no more offshore banking. Demand for non-tax-compliant offshore banking is slowly drying up. At first glance, the barriers to offshore activities appear to have grown higher. But the need for offshore banking remains even in a tax-compliant world, due to the high service level offered by financial hubs, political instability in the home country and clients asking to diversify across locations.
- 13. MYTHS|PB sector 13 Myth #2: You need to play in all growth regions and wealth management segments to ensure lasting profitable growth. Wealth management markets – even those within the same geographical regions – are highly diverse. Market entrants must understand and analyze regional clusters with similar market structures and mechanics to be successful in leveraging their business model. Private banks need to offer a suitable value proposition and an appropriate business model for different clusters in specific regions.
- 14. MYTHS|PB sector 14 Myth #3: Growth only through M&A Despite low multiples, the environment for M&A activities remains challenging due to a lack of suitable targets in the private banking landscape and ongoing regulatory obstacles. The complexity of integrating business reduces the attractiveness of targets, as do legacy issues. Innovative transfers and partnerships continue to grow in importance and will allow for growth without the complexity and uncertainty associated with M&A transactions.
- 15. Relationship/Sales/Account Manger 15 Relationship Manager should become the single point of contact between clients and the various experts of the bank
- 16. No. of customers serviced by one relationship manager 16
- 21. Regulatory challenges to PB Private banks need to focus on selected regions and not follow a one-business- model-fits-all approach. FOCUSED APPROACH1 Aligning pricing, advisory processes and so on is a challenge that needs to be tackled from a strategic point of view, putting the client back at the heart of all activities. REGULATION SHOULD BE SEEN AS AN OPPORTUNITY 2 Private Banks need to understand their own positioning and value profile properly in order to benefit from the current uncertainty in the competitive landscape. BENEFITS FROM UNCERTAINITY3
- 22. Our product and services BUSINESSPLAN|JANUARY2020 22 ACCOUNTS|CUSTODY STOCK MARKET TRANSACTIONS & INVESTMENT OTHER TRANSACTIONS & MEANS OF PAYMENT OTHER BANKING SERVICES
- 23. To recap, clients expect their banks to: 23 Provide simpler and more transparent products Design individual solutions based on pre-defined modules Offer flexible solutions that can be adapted to changes in the clients' situation and circumstances Provide specialist knowledge and recommendations Address portfolio and risk management PRIVATE BANKING | APRIL 2020
- 24. The Product types +Telephone based + Internet based + No advice is provided to the client +The client remains the beneficiary owner Suitable for: Experienced Investors/Brokers/no need for the license EXECUTION ONLY ACCOUNT + Client has the control over the account/ RIA 50/50% + RIA is legally obliged Suitable for: Only RIA or Brokers ADVISORY ACCOUNT +Authorized Broker buys & sells securities without client's consent +Also called Managed account + A new type of DA robo-advising Suitable for: Authorized Brokers/Traders DISCRETIONARY ACCOUNT 24 “ I opened an advisory account with znced professional in making investment decisions. ” "For example, a client might only permit investments in blue- chip stocks."
- 26. 26 Good Luck!