The Private Banking Conference and Awards: London 2014 saw some of the most influential minds in the private banking world congregate at Gibson Hall in June. Illustrious speakers discussed a wide range of topics, including the state of private banking in London, strategic cost cutting through M&A, and enhancing efficiency for clients
Given the complexity and breadth of the market, the conference focussed on London and how it could improve and keep succeeding, both globally and locally, in a time of crucial transition for the sector.
Divided into four main sections spread throughout the day, the conference saw 12 industry experts give presentations which led into panel discussions and Q&A sessions with the audience.
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His speech focussed on the buzzword "culture" in private banking, and the fear it causes. His main points focussed around repairing the damage caused in a "devil’s decade when customers, clients and shareholders seemed to come last", a theme which permeated most of the session. Many speakers discussed the difficulties in regaining reputation and trust and moves towards making this a possibility. Lord Waldegrave emphasised this theme stating that "if we’re not proud of what we do in front of people, I suspect that’s a bit of a clue that we’re not quite happy in our own culture."
The central points of the sessions included:
– The UK had experienced five consecutive quarters of GDP growth, and that signals a move in the right direction in terms of recovering reputations.
– Having a healthy financial sector is crucial in rebuilding confidence in the sector.
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By GlobalDataJames Fleming, CEO of Arbuthnot Latham & Co., said: "It seems to me that if we work hard to rebuild trust and confidence with our customers, overcome legacy issues and be sure to place our clients at the heart of our business, we will ensure the financial services industry will play its full part in supporting economic growth in the UK."
– Younger generations are not typically open to traditional methods of private banking, and clients are becoming more knowledgeable and ‘savvier’.
"Life would be easier if we could have the same rules across all of Europe," said Jeroen Rijpkema, CEO of ABN Amro Private Banking.
Session 2: Innovative strategies driving growth in Private Banking
The second session of the day highlighted the theme of change, including everything from taking advantage of developments in market conditions to the ever-adapting investors and the reshaping of the industry.
A lot of attention was paid to the increasing importance of transparency as well as the impact of regulation, particularly RDR, had on the industry.
Dena Brumpton, COO of Citi Private Bank, summarising many of the themes, said: "The world’s changing and it would be arrogant to think the industry shouldn’t change with it."
The central points of the session included:
"In a world of uncertainty, everyone should be able to access a full breakdown of what a bank is doing," said Adam Horowitz, CEO of Julius Baer UK.
– Private banking is an industry in the middle of structural change.
"Peers are becoming as important as professionals," said Brumpton.
– The new tech-savvy generation is a driver for change as $3trn in assets is set to exchange hands in the next 10 years.
– Many banks tend to neglect the gaps in opportunity because they are too focused on the gaps in performance.
– 60% of clients are multi-bank, with three or four relationships, so a key battle is to become the primary bank for the client.
"For the first time, we’re getting consistency and standards of accreditation.
Unfortunately, some players have lost out," said Ian Woodhouse, director of private banking and wealth management at PwC.
– Many are beginning to prepare for MiFID II and it is likely to be another piece of regulation where the ‘devil is in the detail’ in terms of how it is employed. It also highlights the lack of unity in Europe in terms of regulation.
"We’ve always treated the digital space as the hobby rather than the job and we have to make that shift," said Brumpton.
Session 3: What are private banks doing to be competitive?
Enhancing client efficiency and engagement as well as a refocus on sustainable investments were among the core topics of debate in the third session of the event. Speakers outlined the incoming emergency of addressing the next generation of investors with specific remarks on the scope of wealth transfer and what the scenarios of impact investing will look like in the future. Touching on the hard topic of technology, C. Hoare & Co.’s Annamaria Koerling talked about the challenges of successfully implementing a digital strategy, whilst putting it at the heart of the business without losing the human touch.
The central points of the session included:
– The emerging trend of catering for a new generation of investors. Involving ethics in the investment process solving problems for the clients and the relationship managers.
"If you aren’t incorporating moral and ethic principles into the investment process, you’re missing an opportunity and ultimately you’re probably not serving your clients well," said George King, head of portfolio strategy, RBC Wealth Management.
– New technology implementation has set many challenges and not only for the bigger players. Smaller boutiques have had to reposition their brands whilst maintaining a strong corporate culture, making sure they respond to the changing regulatory environment.
"Is it technology first? I don’t think it is actually; I think for us it’s definitely been people first. But technology has been critical in terms of helping us achieve our objectives, shaping the path and accelerating our trajectory down that path," said Annamaria Koerling, head of wealth management, C. Hoare & Co.
– The world has become massively more complex in the last seven years, with the banking industry changing beyond recognition. Though the UK is ahead of the game thanks to RDR, the biggest challenge is always around client engagement.
"What do clients want? Is advisory a profitable way of doing business?
A lot clients like discretionary management but not just that,"said Nick Tucker, head of UK domestic wealth management at UBS.
"Businesses have to challenge their realities in a five-year time. Take a fair amount of pain now, then later. Be prepared to be 100% transparent," he added.
– To keep a competitive advantage in the organisation, wealth managers should focus on some basic and consistent rules. To be sustainable, businesses need to always challenge what they are doing, the reality of today and the transitive reality of five years’ time.
– Apart from defending the culture and leadership, panellists also said the winning formula consists in remaining best in class, with differentiation businesses that always putting the clients’ needs first.
Session 4: The ultimate challenge: How will London continue to lead?
Last year’s conference focused on what London needs to do to keep ahead of its competitors. It was said London has the winning formula as a centre of wealth management because of its unbeatable connectivity, top-class education, technological brilliance, and a captivating culture.
This year’s conference saw a distinguished group of speakers discussing the challenges London could be facing to maintain its position as a key financial hub and remain at the forefront of private banking. In particular, the panel raised the subject of the increasing need of talented relationship managers as a key differentiator as well as the unique competency in London to serve non-dom clients.
Moreover, another challenge for London will be related to political changes, especially with the general election next year.
Finally, all panellists agreed that although "competition keeps us all on our toes and comes from everywhere", today the main competitors are smaller boutiques, brokers and asset managers who could become more dominant in years to come.
Finally, they believe it is necessary to keep up with the regulatory process as well as make sure players concentrate on their multichannel strategy.
The final and heated discussion reflected on the following:
– London is unquestionably a very attractive place, especially for ultra-high net worth individuals. It has a unique pool of talents, a unique breadth of capability and it is ahead of the curve in terms of regulation.
Jeroen Rijpkema, CEO, ABN Amro Private Banking: "There are 220-240 participants in the UK market. But in five years, will there still be the same number?"
"Talent is the rarest of all competencies, and we all must agree. No technology would substitute the human value and competency," said Adam Horowitz, CEO Julius Baer International UK.
– It is important that the industry makes sure it stays connected with society and that there is little disconnection between society itself and the financial industry.
"We are in an industry of inward looking behaviour. The state of the industry is not about London. It is about the risk business and scale," Horowitz said.
Tucker added: "Competition today is coming from boutiques, brokers and asset managers. In the industry we need optimisation rather than consolidation."
The conference ended with an air of confidence for London, but also a feeling of uncertainty.
Private banks should continue to do what they are doing and "not get distracted". They should keep performing Tier 1 capital adequacies and keep the balance sheets strong. More importantly, private banks need to utilise most of their combined efforts for their clients and use the effective tools to re-engage with their sophisticated demands.
Only time will tell whether the banks have the courage and resources to reinvent themselves in the new digital world, and not get complacent in their traditional approach, which will soon be disregarded once the new generation of high net worth individuals rocket into the private banking arena.
