Global Private Banking Awards 2020 - Analysis: Leading players rise to Covid challenge

PWM’s annual private banking awards sees those institutions which were already repositioning for a digital era able to adjust relatively quickly to a world dealing with coronavirus

Watch the regional results here

Private banks – struggling with a major transition from pure wealth management to a new role encompassing data gathering, analysis and manipulation – are seeing their game plans significantly accelerated by the catalytic Covid-19 crisis.

Both spurred on and challenged by Chinese ‘big techs’, wealth firms leaving behind traditional high cost, oak-panelled boardroom business are already benefiting from widescale digitalisation during the pandemic.

Now banks must move further still to match the needs of ‘Next Generation’ clients, embracing the social revolution rocking the world’s financial capitals.

This is a defining moment for private banks, whose relationship business of personal meetings has quickly transferred to a series of screen interactions. Wealth advisers say cultural changes they expected to play out over years were implemented in a matter of weeks.

Intensive experience

“From a client relationship perspective this has been the most universally intensive experience,” says PWM awards judge and co-founder of the Scorpio wealth management think-tank Seb Dovey.

“Such moments will be remembered. Clients will value the contacts that have demonstrated empathy and offered clear information amid so much uncertainty. For those that did this well, the relationship will endure for many years to come.”

Our judges of the Global Private Banking Awards for 2020, who worked through entries from more than 100 banks, have highlighted how even before Covid, private client relationships were migrating to on-screen and digital formats, complementing face to face contact. They have talked about “increased pressure” on banks to recognise what is valuable in the human interaction and what can be delivered without it.

The mistake many banks make is the assumption that by not delivering in person, the relationship will be valued less by the client. “It is not really about the person, it is about the information and how it is accessed. That is the game changer,” asserts Mr Dovey.

American generation 

This key repositioning for the digital world has been successfully managed by US banks in particular. The private banking arms of JP Morgan, Bank of America, Citi, Wells Fargo and Northern Trust have all scored well in the awards for 2020. Most of our 15 judges concur that this is no flash in the pan. Rather it is the sum of several years of behind-the-scenes strategic work. The US players have long been gearing up their businesses to meet the demands of the 2020s.

Asian players, many of whom have not been hampered by a legacy analogue business, have also been pushing ahead and fast improving the customer experience. The efforts of the likes of China Merchants Bank and Industrial Bank are being increasingly recognised.

DBS in Singapore, another 2020 award winner, has long been highlighted by our judges for expertise in innovation, data and digitalisation. But along with the well-resourced Chinese banks, it is only beginning to break out of its immediate region.

What has surprised our judging panel is the caution of these Asian players compared to their European counterparts, most of whom have not been shy to target far-flung markets. “Other small nation states with strong banking operations have managed to establish themselves multinationally,” says Mr Dovey. “There is no reason why Singapore banks could not achieve this too.”

There is a strong suggestion from some that mediocre services from Western banks have failed to penetrate demanding Asian markets and that the region’s domestic banks are playing a much longer game, consolidating locally before embarking on broader missions, knowing there is no hurry to achieve almost inevitable domination.

Asian wealth engine

“Asia will remain the key engine of wealth creation in this decade. However, it will also remain a difficult region to do business in,” warns awards judge Amin Rajan, CEO of the Create-Research consultancy.

As successful entrepreneurs in their own right, most Asian investors are perhaps more demanding and less trusting. They can be quick to compare the returns on their investments to what they could earn by reinvesting wealth in their own business.

“Their return benchmark is high and its timeline short,” adds Mr Rajan. “Many wealth managers in the West have struggled to deliver the needs of this hard-nosed group, with its zero tolerance for mediocrity.”

Asian players have also been well positioned by their region’s preparedness for a deep and long-lasting pandemic.

“As Covid has been going on longer in Asia than the rest of the world and with most banks already having had past experiences with Sars, they were coming from a stronger starting position,” suggests Simeon Fowler, CEO of Hong Kong-based headhunter Fowler Fox. The bankers he deals with have also been able to dedicate more time, not less, in talking to clients, which has strengthened relationships.

There is also evidence of Asian banks beginning to spread their tentacles globally, including Bank of Singapore, awarded best private bank in the United Arab Emirates. Many of these firms have benefited from Asian clients buying real estate in London, potentially boosting the banks’ European standing.

The banks which have performed best in our awards – Citi, Credit Suisse and UBS – are characterised by this regional penetration and diversity. UBS has triumphed globally, in Asia and in the sustainable and impact investing category. Deadly Zurich rival Credit Suisse also performed well in Asia, while triumphing in the Middle East, Russia and in the entrepreneurial segment, where many clients are Asian sourced and serviced.

Competing powerhouses

These powerhouses are competing more intensely on the other side of the world than on their doorstep and the numbers will further encourage such behaviours.

The latest emerging battleground is south-east Asia, home to  more than 600m citizens, predominantly in their 20s and 30s. These demographic factors eclipse EU and US dynamics, argues Kian Leong, partner with PwC in Singapore. Add in China and Japan, and there is a globally compelling business case. “The potential is immense and simply cannot be ignored,” he says.

“The Asians are coming and it’s not temporary,” argues Gerard Aquilina, partner at family office advisers Cone Marshall. The expansion of European banks into Asia, evident since 2008, will continue. But the one-trick pony of the past, where the largest banks won assets predominantly in Asia, is no longer a sustainable model for private banking, he warns.

Despite the increasing gap between rich developed economies and poorer emerging markets, and the tendency for our politicians to choose economic nationalism over internationalism, major banks are no longer retrenching on home turf as they did five years ago. Global diversification is now exemplified by UBS’s merging of international and US operations and expertise. When it comes to serving global families, this will increasingly prove the game of the future.