CIO EDITION EDITION CIO 2013 CIO EDITION CCO CCO CIA CCO EDITION CCO EDITION CISO EDITION CRO EDITION CISO CRO CRO CRO 2014 CIA 2014 CIA CIA CISO BOD COO EDITION COO EDITION CHRO 2014 CHRO CEO EDITION CEO EDITION CEO EDITION CFO 2015 CFO 2014 CFO InQuarterly insights fromside Deloitte, issue 9, 2015 Interview with Véronique de Path to value for wealth Millennials and wealth management Le Freeport Luxembourg creates la Bachelerie, CEO of Société management centers Trends and challenges of the new perspectives for the Générale Bank & Trust Luxembourg new clientele Luxembourg economy Wealth management and Truths and consequences private banking The Middle East Crowdfunding, an emerging Four drivers of change that Connecting with clients and Challenges and opportunities for market in Europe? threaten business as usual reinventing the value proposition global and local asset managers Maximization of the Finance Cross-border business Tax Reclaim, an innovative Investment management function through Business considerations in the private differentiator for your institution! Equilibrium in the operating models Partnering banking and wealth management of Luxembourg management industries Private banking transformation companies How to improve business Reinvented proposition for higher performance thanks to a holistic Capturing value in a shifting customer value, B2C and B2B MiFID II follow-up of the CFO environment To protect and to serve, but at what cost? In this issue 6 10 18 24 32 42 Each edition of the magazine will address subjects related to a specific function. Please find below an overview of the spotlight for the upcoming editions of the magazine: COO CHRO CIO 2015 Jan Apr Jun Oct 2016 CCO CEO CISO CFO CRO CIA BOD 2 50 56 64 72 82 88 94 100 106 4 Foreword 56 Millennials and wealth management Trends and challenges of the new clientele 5 Editorial 64 The Middle East 6 Interview with Véronique de la Bachelerie, CEO Challenges and opportunities for global and local of Société Générale Bank & Trust Luxembourg asset managers 10 Truths and consequences 72 Investment management Four drivers of change that threaten business Equilibrium in the operating models of Luxembourg as usual management companies 18 Cross-border business considerations in 82 MiFID II the private banking and wealth management To protect and to serve, but at what cost? industries 88 Le Freeport Luxembourg creates new 24 Capturing value in a shifting environment perspectives for the Luxembourg economy Path to value for wealth management centers 94 Crowdfunding, an emerging market in Europe? 32 Wealth management and private banking Connecting with clients and reinventing 100 Maximization of the Finance function through the value proposition Business Partnering 42 Tax Reclaim, an innovative differentiator 106 How to improve business performance thanks for your institution! to a holistic follow-up of the CFO 50 Private banking transformation 114 Contacts Reinvented proposition for higher customer value, B2C and B2B 3 Foreword Dear readers, Welcome to this new edition of Inside dedicated to Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs). The financial services industry has always been a crucial industry at Deloitte, especially in Luxembourg. Inside has become an essential forum for addressing a wide range of businesses, from private banking and wealth management to asset management. In addition, we are also strongly committed to exchanging perspectives from global financial centers, whether from Luxembourg, Switzerland, the Middle East or the United States. This edition includes an insightful interview with Véronique de la Bachelerie, CEO of Société Générale Bank & Trust Luxembourg. She points out that ambitious regulatory requirements, exceptional economic conditions and unstable geopolitical relations pose major challenges to today’s industry and financial services leaders. These complex challenges form the common thread of this edition. Without a doubt, we are at a crossroads. Regulations have quickly evolved since the 2007-2008 financial crisis. CEOs and CFOs have to rethink the positioning of the institutions they lead. In this magazine, several of the authors highlight the growth opportunities that now exist. The real challenge for financial services players is to reinvent their value proposition and show their ability to adapt, to face current challenges—e.g., through cross-border distribution or tax reclaim services. Constant change makes it increasingly challenging for top executives to design and implement a strategy. It is certainly difficult to articulate a strategic vision in the midst of transitions and transformations. But it remains vital to have an inspiring vision. Success amid change is all about leadership. With each issue of Inside, we aim to break new ground and bring you fresh perspectives. Once again, thank you to all our contributors for their enthusiasm and insight. We hope you will find this edition inspiring and thought-provoking. Joël Vanoverschelde Pascal Martino Esther Bauer Partner Partner Analyst Advisory & Consulting Leader Strategy, Regulatory Strategy, Regulatory Deloitte & Corporate Finance & Corporate Finance Deloitte Deloitte 4 Editorial Dear readers, Preparing for opportunities: this is the theme developed throughout this new issue of Inside which is dedicated to CEOs and CFOs in the financial services industry. We aim to provide innovative insights that will allow you to proactively react to an environment that is experiencing “a significant amount of change,” as Véronique de la Bachelerie notes in her opening interview. Companies face numerous opportunities in an increasingly globalized world: cross-border distribution, emerging wealth management centers and the Middle Eastern asset management market, to name just a few. These opportunities will also force companies to adapt to new challenges, such as an increased need for compliance with regulatory requirements or higher geopolitical uncertainty. New regulations that define the playing field continue to emerge. To be prepared, we are focusing on the lessons being learned from MiFID II and the opportunities that are emerging from new regulations. Moreover, identifying new business models and best practices will allow CEOs and CFOs to continue to drive growth and grasp opportunities in this evolving environment. Financial services providers must adapt as new sources of demand emerge and clients’ needs change. Industry players need to rethink their connection to their customers and ensure that they are delivering value. Lastly, companies must understand the specificities of new customer segments, such as millennials, and how to bring value to these new segments. We hope that you will enjoy reading this edition of Inside and will gain insights from it. Yours sincerely, Please contact: Benjamin Collette Partner Strategy, Regulatory & Corporate Finance Leader Tel: +352 451 452 809 [email protected] Pierre Masset Partner Corporate Finance Leader Tel: +352 451 452 756 [email protected] François Gilles Benjamin Collette Pierre Masset François Gilles Senior Manager Partner Partner Senior Manager Strategy, Regulatory & Corporate Finance Strategy, Regulatory & Corporate Finance Leader Strategy, Regulatory Tel: +352 451 453 751 Corporate Finance Leader Strategy, Regulatory & Corporate Finance [email protected] Financial Services Industry & Corporate Finance Deloitte Consulting Leader Deloitte 560, rue de Neudorf, L-2220 Luxembourg Deloitte Grand Duchy of Luxembourg www.deloitte.lu 5 Interview with Véronique de la Bachelerie, CEO of Société Générale Bank & Trust Luxembourg Interviewed by: YOUR INDUSTRY At the same time, the geopolitical environment is unstable in various regions of the world and changes Petra Hazenberg Q: What are the major challenges faced by are unpredictable. Société Générale has a global Partner your industry and how do they impact your client base and relies on its international network, Strategy, Regulatory business? & Corporate Finance part of it being Central and Eastern Europe which We are experiencing a significant amount of changes Deloitte at the moment is less stable. This was the case at the moment, some of which can be observed on a for other regions not long ago and might occur more general, cross-industry level, and some of which Pascal Martino somewhere else in the future. The enigma is such that Partner are specific to the financial services industry. because rates of return in Western countries are low, Strategy, Regulatory One of the most complex challenges is to reconcile companies are forced to enter emerging economies. & Corporate Finance the regulatory requirements, notably capital The challenge is to achieve growth while operating Deloitte requirements, and our shareholders’ needs and return in Western countries where revenues are stable but expectations. This is, for example, observable from stagnating and operating in countries with higher Michaela Janurova our group’s results but applies to the industry more rates of return but equally higher geopolitical risks. Analyst generally: despite revenue growth, we have a good Strategy, Regulatory but stagnating ROE of 7.7 percent. As other industries Q: How are client needs evolving and what are & Corporate Finance have an ROE ranging between 10 percent and 12 the commercial implications? Deloitte percent, investors inevitably demand comparable The biggest change is that there is a growing share returns from banks. From 2005 to 2008 banks had of elements in the banking