FUTURE OF PRIVATE BANK IN INDIA

Presented To: Mrs. Neena Sareen Presented By: Ashima Garg B.Com- Prof.-I Roll No. 5908
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Aims of Presentation

Examines the future prospects for the private banking / wealth management industry Recaps key trends Focuses on sources of new profitable growth:

Geographical areas Client relationship deepening. New areas / propositions Future industry structure Critical success factors.
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Key Future Trends

Private banking firms need to develop their

businesses models and change (or enhance) their

strategic focus in order to take advantage of the

opportunities afforded by higher growth markets

and product segments. Global private banks are actively developing activities in the three key markets of India Growth in the offshore wealth management area is expected to lag that of onshore business.
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Transformation of wealth management

Sources of new profitable growth

Geographic participation. Potential growth opportunities in established and new markets Client relationship deepening. Increasing the penetration and loyalty of existing clients, and targeting new client segments New propositions. Developing product and service innovations and personalising the wealth management advisory role.

Geographic participation

New emerging wealth markets:

Particular attention has focused on the BRIC economies Such as India has projected economic growth over the coming decades. Indias economy could be larger than Japans by 2032 Chinas larger than the US by 2041 (and the second biggest economy in the world by 2016) Goldman Sachs forecasts show that the combined BRIC economies will be larger than the current G6 (US, Japan, UK, Germany, France and Italy) by 2039.

Overtaking the G6: when BRICs US$GDP would exceed G6

Source: Goldman Sachs (2003).

The largest economies in 2050

Source: Goldman Sachs 2003.

HNWI financial wealth forecast by region, 20042009E (US$ trillions)

Source: Capgemini Merrill Lynch (2005), World Wealth Report Capgemini.

Growth of multigenerational client relationships, by client type, 20022004

Source: Capgemini Merrill Lynch (2005), World Wealth Report. Capgemini. 10

New Clients

New clients will emanate primarily from those economies expected to have the greatest economic growth potential, namely Russia, India and China These will have created their wealth through entrepreneurial activity and will seek services that reflect their greater familiarity with more complex financing options coupled with relatively strong protection elements
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Non-financial lifestyle services

Lifestyle services are an umbrella term referring to a wide range of services designed to support, facilitate and improve the lifestyles of wealthy clients Includes: 1. Lifestyle organization services aimed at assisting in organizing and facilitating aspects of individuals lives such as leisure, entertainment, shopping and event planning. 2. Travel services aimed at supporting and arranging individuals travel requirements. 3. Property and home services aimed at assisting with individuals household and property requirements including finding, purchasing, moving and maintaining the home. 4. Luxury asset acquisition services aimed at helping wealthy individuals in the purchase and management of large-scale luxury items.

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Increasing client penetration and loyalty

Understanding the needs and aspirations of clients Focusing on higher-value clients Creating value-added services for clients.

Focus on delivering relevant value to targeted clients. That, of course, requires wealth managers to understand the needs and expectations of clients and also really demands that the relationship manager understands more precisely what clients value.

Confidentiality Security and Performance are important value-enhancing propositions.

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Lifestyle services

Source: Datamonitor, Incorporating Lifestyle Services into the Wealth Management Proposition Survey 14 , May 2003,

Aggregator role

The industry is increasingly being viewed (and talked about) as an aggregator, whereby a whole range of suppliers, both internal and external to the bank, offer a range of services that can be offered individually or bundled together to meet client needs. Such aggregation activity means that wealth managers have to be much more nimble and efficient in sourcing, distributing and identifying value-enhancing services (for both the client and the bank). The aggregator function of wealth managers, and the growing focus on value-added advice led sales, has encouraged (or forced) the industry to consider developing their business along similar lines to the family office, with the aim of offering holistic and independent advice.

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Industry Structure - Evolving to the next level of a global trusted advisor?

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Winners and losers in European wealth management over the next 3 to 5 years

Source: Mercer Oliver Wyman (2005).

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Key is to develop common skills in building relationships

Source: IBM Consulting Services (2005).

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Conclusion

Examines the future prospects for the private banking / wealth management industry Focuses on sources of new profitable growth:

Geographical areas China, India, Russia Client relationship deepening focus on mid-wealth HNWIs and intergenerational wealth planning services + focus on holistic advice New areas / propositions women, ethnic groups, lifestyle services, family office style services Future industry structure Critical success factors - building on relationships, more value-based approach to business and clients
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