The private banking industry is one of the biggest and strongest pillars of the modern the economy.
But then a pandemic swept the world, creating tremors that shook the pillar to its core.
However, thanks to digital transformation across most industries, the market seems to have recovered at a pace much rapid than one could imagine. It is not all bad. In fact, there were several positives we learned along the way. And those positive learnings are expected to shape the private banking industry in 2021.
Here they are.
Digital transformation — which entails the adoption of business intelligence solutions, such as cloud technology and automation tools — has enabled private bankers to work smarter. And that too at their kitchen tables or home offices.
Not only do we expect more private banks to welcome remote working, but we also expect the technology to evolve and grow more sophisticated. This is because while digital transformation has its advantages — greater productivity, cost-effectiveness, scalability — it also has its disadvantages — a fading work-life balance.
As business intelligence tools grow more advanced, their scope of intelligence widens, making them capable of automating increasingly more complex tasks. As a result, the private bank workforce will be able to focus more on core, creative tasks, which are far less tedious and hence, more satisfying. Whereas the saved time can be spent where it matters most: on oneself and one’s family.
Modern client engagement
Digital transformation is a win-win for both private banks and their clients.
Both parties wish to maximize efficiency. For banks, as explained, efficiency is the product of automation and improved data management. For clients and customers, efficiency is a product of ease of use. Banks that offer their services online, say, via an all-in-one app, fare much better than banks that offer their services exclusively offline. Especially during a pandemic.
This is particularly true of for modern clients, who are younger and more accustomed to digital life. In fact, not having a digital presence is believed to be a major red flag today.
Still, in the new normal, digital might seem the default. But it is not true.
Naturally, at a time when uncertainty is sky-high and our sense of mortality has never been more urgent, clients are re-evaluating their priorities. Conversations have turned more serious and meaningful, focusing on insurance, long-term growth, wealth transferring to children, spouses, and families, in essence. Wills.
Different generations might have different ideas about how taxes and wealth must be dealt with. But such conversations are still uneasy to have virtually,be had virtually on Zoom calls. Most clients would still prefer to have them in person. Trust is critical.
For the rest, digital is the way to go.
Sustainability is in
ESG is far from new.
But modern investors are more inclined to invest responsibly, in long-term, sustainable growth. ESG, therefore, is one of the world’s most rapidly growing markets, growing at a record rate of 42% just last year.
And private banks are taking notice. They want in.
In 2021, and beyond, ESG consulting is expected to boom. At the same time, private banks will prioritize investments in sustainability, offering their newest generation of customers more green options.
Investing in sustainability is also a win-win.
First, investing in ESG is strategically sound because ESG portfolios are built for the future — they are optimized for minimum risk. And second, by investing in companies and institutions that alleviate poverty and hunger, and are more equal, inclusive, and ethical, they bring real, positive change.
The pandemic has redefined our notions of work and wealth.
Burned-out, more employees are quitting their jobs, opting to focus instead on their hobbies and families. They are seeking more control of their lives. They are setting their sights on entrepreneurship.
And, in 2021, private banks are obliging.
This year, and beyond, opening a business is expected to be quicker, easier, and cheaper than ever.
Challenging times make for big changes. This year is going to be full of those.