|
|
 |
|
Viewing report
|
|
|
|
Private Banking and Wealth Management models - No 'Magic Bullet'
VRL Financial News Publishing, Nov 2010
There is a popular view that the eventual consolidation of the fragmented wealth management and private banking sectors is inevitable. The latest report from VRL refutes this assumption, suggesting that there is 'no magic bullet', and proposes that these disparate groups are functioning well enough in their current state, negating the need for consolidation.
The private banking and wealth management segment is one of most diverse and least concentrated constituents of the global financial services sector, populated by a very diverse range of firms in terms of size, corporate structure, functions discharged, client groups targeted and revenue mix.
This sets it apart from its peers in the financial services sector as well as other segments of the global economy which have a much more concentrated structure. But this may change according according to a number of experts. Their prognosis is that the sector will consolidate with a smaller of number of much bigger firms accounting for a much bigger proportion of the market.
This report disputes these assertions. It points out the current fragmented structure will persist for some time for a variety of reasons and that a variety of business models will continue to prove successful in generating profits and growth. There is no 'magic bullet'.
The private banking and wealth management sector is one of the fastest growing segments of the global financial services sector. Forecasters expect it to continue growing at a healthy rate for the foreseeable future, especially in Asia and other so-called 'emerging markets'. It is also profitable in both absolute and risk adjusted terms. This is not an environment that is consistent with the onset of increased competition-induced consolidation.
More over, there is little evidence to suggest that the sector enjoys significant economies of scale and scope, which could also provide a catalyst for consolidation. There are certain segments of the wealth management value chain that do benefit from economies of scope and scale. Taken overall, however, these are likely to only a limited impact on the sector's structure and more than counterbalanced by the impact of the 'outsourcing' revolution.
The report contests that many of the business models currently employed by the sector remain valid and are being adopted to address the new challenges posed by the new post-financial crisis environment in which the sector now operates. Providing that firms can get access rich and affluent clients - and are not complete incompetents - they should continue to prosper.
This report allows readers to:
- Analyse the characteristics of the private banking and wealth management sectors
- Study the decline in value chain disaggregation
- Gauge the potential for consolidation in future
- Refute the idea that this fragmented market will ultimately consolidate
- Compare the success of small independent businesses in this sector and the larger integrated businesses
- Make predictions for future market growth
|
|
|
|
