Private Banking in Switzerland Quo Vadis?
financial services Private Banking in Switzerland Quo vadis?
Foreword 5 Contents Survey Highlights 6
1. Industry landscape: market size, M&A and consolidation 8
2. Catalysts for change – the impending transformation 13
3. Private banking business models and their propositions 18
4. The use of “Open Architecture” 21
5. CRM growth and excellence 23
6. Cost optimization – a business imperative 24
7. Sourcing strategies 27
8. Risk management – increasing importance in private banking culture 29 A study by KPMG Switzerland in co-operation with the Institute of Management at the University of St. Gallen
Contributors to this study:
University of St.Gallen (HSG) Prof. Dr. Christoph Lechner Director & Chair of Strategic Management Institute of Management – University of St. Gallen Tel. +41 71 224 39 03 [email protected]
HSG ■■ Prof. Dr. Christoph Lechner ■■ Dr. Markus Kreutzer ■■ Michael Boppel ■■ Daniel Albert ■■ Lyndon Oh ■■ Fredrik Palm
KPMG ■■ Daniel Senn, Partner ■■ Glenn Hempel, Senior Manager ■■ Michael Alder, Manager ■■ Christian Hintermann, Partner ■■ Stephen Bates, Director ■■ Dr. Marc D. Grüter, Director ■■ Charles Hermann, Partner Private Banking in Switzerland – Quo vadis? 5
The Swiss private banking industry may While there have been a number of Foreword be forgiven for feeling that it has spent studies examining some of the global much of the past year under attack. First challenges for the financial services the deepening economic crisis. Then the industry, none has examined the Swiss culmination of measures (long sought private banking market recently, with by many governments, but hastened by its unique characteristics and traits. the financial crisis) to curtail “off-shore Many parties cite banking secrecy as a banking”. The question is – is the worst key factor behind the Swiss industry’s now over? success; but is this really the case and what does it mean going forward in the The vocabulary has changed over new, transparent environment? recent years… Senior executives are now likely to be using phrases such as KPMG in Switzerland and University transparency, cost control, rationalization, of St. Gallen (HSG) have undertaken re-positioning, survival, simpler products, research that identifies the underlying suitability, more demanding clients, and business drivers, opinions and some more stringent regulation. options that are being contemplated. The survey sample represents the The one phrase that all executives in the majority of private banking and wealth sector should be using more frequently management firms in Switzerland is “the need for change”. The market is and Liechtenstein in terms of assets transforming around them, and those (excluding UBS and Credit Suisse which service providers that do not adapt will between the two, constitute about half become out-dated, out-competed and the market). It is clear to us that those thoroughly out-performed. Fortunately, organizations that recognize, but above the opportunities as well as the all act on, a need to transform and challenges are diverse and far-ranging for fine-tune their business and operating those that get it right. models fast enough to respond to market developments are the ones that For too long the term “private banking” are most likely to secure sustainable has implied a homogeneous unit – a revenue streams. single mass of banks with similar behaviors and approaches. This does How the Swiss private banking industry not reflect the truth. In order to uncover faces up to the many challenges and its diversity, we have assessed the its position as a leader in wealth Swiss private banking sector in terms of management remains to be seen, but it segments and sizes. We segmented the will be critical in terms of future success. various business models into three broad groups: the so-called “pure player” KPMG and HSG would like to thank all private banking firms; the universal and respondents for their participation in the cantonal banks with private banking survey. businesses; and the predominantly global “integrated hybrids” with stronger cross-fertilization of clients, products and services. 6 Private Banking in switzerland – Quo vadis?
Industry landscape 3. in switzerland, consolidation in survey the industry is accelerating and 1. confronted with fundamental likely to take place mainly among change, private banking is the small to medium sized banks Highlights currently in an assessment phase. (less than cHf15 billion auM). There is much to do in terms of currently, larger banks (more than KPMG and HsG survey of 30 private overcoming the challenges as well cHf15 billion auM) see good banking and wealth management fi rms* as determining how to address the M&a opportunities, providing in switzerland and liechtenstein increasingly restrictive regulatory the strategic fi t makes sense.
55% of the non-UBS & Credit Suisse market and legal environment. The risks Potential buyers remain cautious captured in survey: CHF 1,250 bn of cross-border business activities though and are being prudent in Survey participants relative to Swiss* market size (CHF billions) have increased. making moves. The private banking industry in switzerland will see an Swiss Market 2. The growth in private banking will increased intensity of competition in survey UBS & Credit Suisse occur primarily outside switzerland. and a trend towards larger critical scope (out of scope) The traditional strengths of the size in the future. swiss fi nancial center (e.g. client Total market size of 2,300 all banks participating banking secrecy, lower tax burden 4. Opinions regarding market size and in survey by Assets and other advantages such as net new Money (nnM) growth 1,250 under Management (AuM) stability) and strengths of a or decline in the swiss private swiss private bank cannot readily banking sector over the next few
*Plus Liechtenstein banks: CHF 160 bn be exported. To which degree years vary greatly. smaller “pure the private banking industry in player” banks are more pessimistic 30 banks participating in survey switzerland is able to capture in their outlook. Overall, when Categorization used: future growth is open to debate. weighted amongst the large and almost all private banks still plan to smaller banks – the industry as a Small – Medium sized AuM < CHF 15 bn) hire client relationship Managers whole could see “zero” growth. 14 16 (crMs), however only one quarter realistically, the sector should are satisfi ed with stated asset be prepared for a decline over Large sized (AuM >CHF 15 bn) transfer objectives. Banks which do the next three years, unevenly not currently have access to foreign felt. Much will depend upon the ■ Survey research method: dual approach ■ Qualitative face-to-face interviews with markets might struggle more in the industry’s response to, and the C-levels followed by: face of intensifi ed competition in a global ramifi cations of, changing ■ Quantitative questionnaire contracted swiss market. tax rules.
71% 79% 57% Believe that the swiss private banking Believe current challenges will lead to Believe that the private banking industry must transform to overcome industry consolidation industry will grow outside switzerland the challenges faced over the next three years 67% 68% 29% Believe that the traditional off-shore Believe that good M&a opportunities Believe that the private banking banking business will decrease over exist and valuations are attractive industry will grow inside switzerland the next three years. over the next three years Private Banking in Switzerland – Quo vadis? 7
5. The promise of emerging client 7. Regulatory changes (bank secrecy, 9. The pure players, which focus segments such as from Asia application of OECD Standard 26 their core business on private holds promise for those banks etc.) have a potentially massive banking are expected to increase that are well positioned, offer the impact upon the future business their market share. In particular, right value proposition and have model and may lead to a decline they will be successful if their size the right cultural fit and segment in off-shore business. The and business and operating model knowledge. Larger banks have increasing tendency to prosecute can be successfully adjusted by an advantage here versus small- or criminalize CRM activities in focusing on their USP (possibly medium sized banks. This is no various countries increases liability updated). Independent Asset panacea and no quick win for the and reputational risks. Managers are favorably regarded industry as a whole. in attracting niche market share. Overall, large pure players and Business & operating models integrated hybrid banks are the Catalysts for change most optimistic about growth 8. Regarding future business models: prospects. 6. There is a noticeable downward differentiation, open architecture, pressure on gross revenue margins. client centricity, lower risk and 10. Private banking will above all need Smaller banks may be hit harder. understandable products, improved to differentiate itself by so-called In this regard, the larger private client reporting and comprehensive “value drivers”. Specifically, the banking firms that possess a client advisory, integrated risk core value proposition is based greater array of options in adjusting management culture all play a upon client servicing as well their business models and scale central role. In general, there will be as being specialized in at least have a considerable advantage. less “product pushing” and greater one area of Research, Portfolio Systematic cost optimization individual client focus. Differentiation and Asset Management. Less excellence is only practiced by a includes how the bank demonstrates client facing activities such small minority – the focus thus “outperformance” in their as Fund Administration and far has essentially been more asset management offering. Custody Services as well as shorter term tactical cost reduction Differentiation will also focus on the IT and Infrastructure are often measures (i.e. less than 10 percent). client interaction. Who produces outsourced. the financial product is no longer important – much more important is that it is the right product for the client. Demonstrating competency * The terms “private banking” and “wealth management” are used interchangeably for the is key. purposes of this publication.
14% 96% 93% Believe that profitability / gross See clients are demanding increased Plan to hire Client Relationship revenue margins are sustainable transparency from their bank and Managers (CRMs) over the next three simpler to understand products years 88% 64% 40% Believe that the intensity of Plan to expand open architecture Believe that private banking has competition within the private banking offerings become more of a commoditized industry will increase business 8 Private Banking in Switzerland – Quo vadis?
Section 1: Industry Landscape: market size, M&A and consolidation
Market size of the Swiss private of the market. UBS and Credit Suisse total securities holdings in Switzerland banking sector manage half of the total assets. relates to non-residents (offshore Determining the precise size of The part of the market that is most clients), however we note that this the Swiss private banking market is fragmented, and where we expect does not include the cash holdings of difficult, but KPMG’s private banking to see the greatest change and most HNWIs. Between 2004 and 2007 non- database of 112 private banks in opportunities for consolidation, is resident securities grew by a CAGR of Switzerland estimated it to be around among the smaller banks. There are 26 16 percent. CHF4.7 trillion in 2008.1 banks (AuM greater than CHF15 billion and less than CHF50 billion) managing The private banking sector is highly approximately 16 percent of the fragmented, though the top end of Swiss market and a further 73 banks 1 auM according to KPMG’s database (total of 112 banks) the market is concentrated, with with AuM less than CHF15 billion includes all securities net of double counting of own bank fund investments according to their statutory the top two players (UBS and Credit representing seven percent. reporting Suisse) and 11 larger sized private 2 snB statistics 2008: SNB statistics are based on banks (AuM greater than CHF50 According to the SNB, approximately the securities holdings in bank custody accounts which excludes balance sheet assets (cash and cash billion) together managing 77 percent CHF2.2 trillion2 or 56 percent of the equivalents)
Chart 1 – Swiss private banking market by bank size (AuM)
7%
UBS & Credit Suisse 16% Banks (> CHF 50 bn) 50% Banks (CHF 15 bn – CHF 50 bn)
27% Banks (< CHF 15 bn)
Chart 2 – Swiss private banking market by bank type
16% Subsidiary of foreign bank 8% Cantonal bank 68% 8% Banquiers privées
Swiss based private banks Private Banking in Switzerland – Quo vadis?
29% 57% Believe that the industry will grow Believe that the Private Banking inside Switzerland over the next Industry will grow outside three years Switzerland over the next three European Union (EU) citizens’ years undeclared assets – the threat The current pressure on perceived tax less than one third (29 percent) see the enable them to service foreign clients haven countries such as Switzerland industry growing within Switzerland on a “compliant” cross-border basis represents a potential risk to offshore over the next three years. out of Switzerland? Can they compete assets booked in Switzerland should against home-grown players in the the undeclared assets of private There are polar views between large clients’ respective domiciles? banking clients be repatriated to and small-medium banks. Three their respective home country. In the quarters of larger banks tend to Fifty percent of participants believe absence of statistics on the precise see growth prospects outside of there will be growth of between zero size of this market, we provide an Switzerland with intentions to expand percent and 25 percent, while 36 estimate below derived from the SNB their onshore businesses which percent believe that there will be a data for 2008 and statistics from the would limit the risk of European asset decline of between zero and greater Swiss Federal Department of Finance repatriation of undeclared assets. than 25 percent in the Swiss private on EU withholding tax. This estimate Smaller banks think there is too high a banking market over the next three of the “at risk” assets is considered price to pay and plan to develop their years. Larger banks are about twice as part of our assessment of the client relationship manager (CRM) as optimistic as the small-medium Swiss private banking market growth teams and services to reach out sized banks. These conflicting findings expectations. and fulfil the needs of their offshore reflect the continued source of new HNWIs. We would question if enough emerging wealth from markets such Growth expectations for the Swiss Swiss banks in their current form are as the Middle East, which is an private banking sector – a cause for well positioned to take best advantage opportunity for some banks, while optimism? of this trend. Are their business models losses are highly dependent on More than half (57 percent) of conducive to retaining or capturing the speed of asset repatriation and respondents expect the industry to business outside of Switzerland? Are pressure from EU governments. grow outside Switzerland, whereas they positioned in a way which will
Chart 4 – Resident / Non-resident development
2006 2004 2007 2005 Chart 3 – Resident / Non-resident development 2008 CHF 3,500 3,131 3,000 2,270 2,242 31% EUR 2,500 2,000 1,771 Resident Non-resident securities 44% 56% securities 32% CHF 1,500 holdings holdings 1,000 31% USD 500 6% Other 0 currencies Resident Non Resident 10 Private Banking in Switzerland – Quo vadis?
When we assess the long term the non-resident securities holdings the center of wealth management growth expectations for the Swiss from EU clients being “at risk” expertise and continues to attract private banking industry we see on (approximately 20 percent – 25 percent NNM from emerging wealth regions the negative side the potential outflow of the total Swiss private banking such as the Middle East, Asia and of European client assets booked in market). more recently Russia and Central and Switzerland and on the positive side Eastern Europe. growth in worldwide wealth along with We assume the risk of the Swiss improved performance returns as the private banking industry losing the Return of asset values financial markets recover. 20 percent – 25 percent stated above In the seven months to July 2009, to be the worst case. More likely it the securities holdings of the Swiss Loss of European undeclared assets may be approximately 10 percent – private banking industry grew by Using the SNB statistics for non- 15 percent. approximately eight percent according resident securities and holdings and to the SNB. This was driven largely the findings of the Swiss Federal Positive growth of worldwide assets by the rally of equity values across Department of Finance, we assume Growth expectations for worldwide Europe’s major exchanges. approximately half of the non-resident assets is 8.1 percent3 per annum securities holdings are EU clients, of to 2013. Switzerland has long been The implications… which 80 percent are undeclared in We expect that the potential 3 “World Wealth Report 2009” Cap-Gemini and Merrill Switzerland, resulting in 40 percent of Lynch repatriation of European citizen assets
Chart 5 – What will be the percentage growth or decline in the Swiss Private Banking industry in the next three years?
All respondents Small-Medium banks (AuM
>25% 0 50% believe >25% 0 36% believe >25% 0 64% believe Growth Growth Growth 10% – 25% 4 10% – 25% 0 10% – 25% 7
5% – 10% 14 5% – 10% 14 5% – 10% 14 Increase Increase Increase
0% – 5% 32 0% – 5% 22 0% – 5% 43
0% 14 0% 21 0% 7
-5% – 0% 4 -5% – 0% 0 -5% – 0% 7
-10% – 5% 21 -10% – 5% 22 -10% – 5% 22
-25% – 10% 7 -25% – 10% 14 -25% – 10% 0 Decrease Decrease Decrease 36% believe 43% believe 29% believe > -25% 4 Decline > -25% 7 Decline > -25% 0 Decline
0 10 20 30 40 0 10 20 30 40 0 10 20 30 40 Percentage Percentage Percentage Private Banking in Switzerland – Quo vadis? 11
to onshore banks is likely to result in the challenges. This is not expected about. In the previous three KPMG Switzerland losing market share in the to have a long term material impact global private banking surveys “Hungry short term on the world stage. Overall, on Switzerland’s position as a wealth for more”,4 respondents believed that AuM may fall by between zero percent management center if Swiss private deal activity will increase with fewer and ten percent, a substantial decline banks adjust their operating models to players having greater market share. compared with historical growth rates the new world order. of 15 percent between 2004 and 2007. This has not happened in Switzerland, There are many variables which could Consolidation – is it ever going to due largely to limited opportunities and influence the precise figures, which happen? high prices (very often in the range of includes the extent to which the Swiss Consolidation within the private private banking industry can address banking industry has long been talked 4 KPMGs “Hungry for More?” 2006, 2007 and 2009
Chart 6 – Current challenges in our industry will lead to industry consolidation. Fewer players will have a higher market share
Strongly agree 25
Agree 54
Neutral 3
Disagree 18
Strongly disagree 0
0 10 20 30 40 50 60 70
Percentage
Chart 7 – Currently, good M&A opportunities exist and valuations are very attractive
Strongly agree 4
Agree 64
Neutral 28
Disagree 0
Strongly disagree 4
0 10 20 30 40 50 60 70
Percentage 12 Private Banking in Switzerland – Quo vadis?
equity plus 3.0 percent to 4.5 percent CRMs actually achieve their stated We believe the consolidation of of AuM). The price expectations of asset transfer objectives. Strikingly, the Swiss private banking sector buyers and sellers were historically about 43 percent across all banks were will accelerate – the challenges wide – we have seen fewer than ten not convinced either way. Pure player that exist for private bankers in completed transactions with private CRMs enjoyed slightly more success Switzerland mean that M&A is banks in Switzerland greater than with asset transfers. Hiring CRMs is more likely now than it has been CHF5 billion AuM in the last two years. above all the most favored approach to recently: So why should it happen now? private banking growth with perceived medium risk and, generally speaking, ■■ Increasing competition: 88 Seventy nine percent of respondents representing a good source of new percent of respondents are believe that industry challenges will client AuM. convinced that competition will lead to consolidation. In addition, 68 increase over the next three years percent of respondents believe that Given the current challenges for private ■■ The erosion of banking secrecy there are good M&A opportunities banking in Switzerland it is likely that and the perceived benefits in the market and that valuations are consolidation in the sector will gather taxation benefits attractive. This view is very different pace in 2010, particularly for the ■■ Repatriation of European offshore to the previous three “Hungry for foreign owned subsidiary banks and banking assets due to tax more” surveys, where participants small to medium sized private banks. amnesties such as in Germany, named higher prices and the lack of This is the sector of the market that Italy and the U.K. opportunities as the key reasons why is highly fragmented, is under the ■■ Sale of foreign owned subsidiary transactions did not happen. regulators microscope, is suffering private banks in Switzerland due from relatively poor performance and is to the need for capital and the Recent transactions in Switzerland ultimately where the competition battle restructuring requirements of the support the consolidation trend, with may be won or lost. EU on foreign banks that receive prices being in the range of government support 0.5 percent to 1.5 percent of AuM. ■■ Increasing regulation: particularly Recent examples include the Swiss impacting smaller banks where private banking operations of AIG, the increasing compliance costs Dresdner, Commerzbank and ING. may lead to continued poor returns Despite opportunities existing for ■■ The trend points to larger sized Swiss banks, more than 85 percent banks and depending upon the of participants believe that growth amount of markets served, through M&A is risky and have degree of product and service, recently focused on acquiring smaller, and business complexity - size is bolt-on CRM teams. Ninety three increasing across the industry. percent of all respondents intend to increase the number of CRMs over the next three years despite the fact that only 25 percent are satisfied that Private Banking in Switzerland – Quo vadis? 13
Section 2: Catalysts for change – the impending transformation
Margin pressure as a catalyst for Many clients may of course continue Size more important than business change? to pay a premium for perceived value, model, but model may still be the key Margins will be squeezed still further, quality, brand and stability. However, A difference in margins between the in our view, as lower asset yields and many of the younger generations of various business models was identified fewer structured products lead to HNWIs (i.e. new and inherited) are mainly in the mid-range. Integrated lower margins in the potential new era prone to be less stable in their choice hybrids’ believed that the 75-90pbs of “declared assets” together with of private banker and may go for best margin range was realistic, which was the additional costs associated with value rather than base their choice the highest of the respondents in that increased compliance. Products and of service provider on loyalty or past range. Interestingly, almost half of all services aside, the greatest driver will relationships. respondents are unsure when asked ultimately be sustaining margins. about the future sustainability of gross margins.
Chart 8 – What is your gross revenue margin target (in basis points) on your AuM which you will be realistically able to achieve given the current situation in the next three years?
All respondents Small-Medium banks (AuM
More than More than >110 bps 0 0 0 110 bps 110 bps
90 – 110 bps 41 90 – 110 bps 22 90 – 110 bps 61
75 – 90 bps 44 75 – 90 bps 57 75 – 90 bps 31
60 – 75 bps 15 60 – 75 bps 21 60 – 75 bps 8
Less than Less than <60 bps 0 0 0 60 bps 60 bps
0 10 20 30 40 50 0 10 20 30 40 50 60 0 10 20 30 40 50 60 Percentage Percentage Percentage
14% Believe that profitability / gross revenue margins are sustainable 14 Private Banking in Switzerland – Quo vadis?
67% Believe that the traditional off- shore banking business will decrease over the next three Size, on the other hand, did make years players who were most pessimistic. a difference. Sixty one percent of Pure players seemed to pin their hopes the larger banks surveyed see gross most value? Might some banks choose on improving client service quality and margins in the 90-110bps range to focus on higher-end products and orientation as a means of being able to compared with 21 percent of small and drop some lower earning services? realise higher margins. This will further medium-sized banks. Conversely the The answer may be in refocusing the put the squeeze on small-medium 75-90bps range represented only business and operating model. sized banks in terms of sustaining their 31 percent of the larger banks yet income. 57 percent of the small and medium- Rationalization, alignment of client sized. segments with the service and product Off-shore business under pressure portfolio, and better strategic cost Off-shore banking has come under The majority of respondents were optimization may be the name of increasing pressure. This has not convinced they would be able to the game given the complexity and encouraged private banks to look continue to sustain margins at current compliance requirements of some beyond and favor a strategy paying due or past levels. Despite being relatively services. Therefore, their business attention to on-shore business. close, most still see gross margins and operating model may undergo falling to 75-90 bps, though 21 percent a transformation which will include The precise meaning of “on- (the small-medium sized) expect the “right-sizing” priorities. shore banking” depends upon the range to be 60-75bps when drawing perspective of the bank. It is generally comparisons to “on-shore” peers. Despite accepting that margins might interpreted as being the provision of not be sustainable at current levels, it banking services to a client through Questions arise as to how banks can was striking that respondents generally operations based, and assets booked, stem this pressure. What impact on did not consider margins to be in the client’s country of domicile. For margins will brand and reputation play? dramatically under threat. Of those that the Swiss private banking industry To which aspects will clients attach expressed concerns, it was the smaller this means either the bank focuses
Chart 9 – Business and Operating Models: On-shore / Off-shore strategies
All respondents
43
63
50 Expand into new markets 85 Intensify existing markets On-shore Off-shore
0 10 20 30 40 50 60 70 80 90 100 Percentage Private Banking in Switzerland – Quo vadis? 15
on-shore within Switzerland and / or adaptation required, which can affect Burgeoning client segments: Look in addition operates on-shore in the their cross-border operating model. East! But no panacea client’s country of domicile. “Off- Further hurdles can be around choice of Private banks may decide to focus on shore” is commonly meant to imply local distribution network and partners, the high growth markets in Asia and the opposite of an “on-shore” client, and cultural aspects, among others. the Middle East. Fifty four percent i.e. non-Swiss domiciled clients of all respondents attributed a high booked in Switzerland. Perhaps it is time to consider less importance to expansion into new explored routes to markets. Could markets abroad. This strategy however A move towards on-shore banking banks adapt to the new regulatory is interpreted as highly risky by 68 could be hugely significant for and tax environment by passporting percent of all banks. The issue here is Swiss banks. As 88 percent of all existing EU subsidiaries under MiFID how portable the Swiss banking model respondents judged that competition (Markets in Financial Instruments is. Some of the traditionally strong within the industry will intensify, along Directive)? Or seek new ways to selling points such as discretionary, with opinions that the Swiss market offer their services in-country based managed mandates, tax advantages could possibly contract, the question from Switzerland via specific country and particular service standards do not is whether there will be too many exemptions of local banking licence necessarily translate into advantages banks chasing too few client assets for requirements in Europe? We are in the Asian market for instance, on-shore domestic private banking in aware of such opportunities which where there is typically a preference Switzerland. Attention has therefore do in fact provide a certain degree for non-advised type models. Some turned to considering the potential of of flexible off-shore strategy in a of the respondents mentioned Asian on-shore banking within the client’s compliant manner. No matter what, client investment behavior and their country of domicile. The risks are a review of cross-border business reasons for selecting a private banking high from an operational as well as a models would be desirable, or even relationship are different from that regulatory viewpoint. necessary. Getting smart about dealing of a European or Swiss client. This with regulation to your advantage in is a segment where clients tend to the future is essential to ensuring take much more active control over that your business can function their assets. Establishing a new 54% and opportunities can be captured. local presence in Asia may be highly Believe it important to expand into Regulation per se need not always be a desirable but is also an expensive, new markets abroad negative thing. riskier proposition with long lead times. The cultural fit is important according With mixed results, the past five years to many respondents. or so have seen a surge of Swiss private banks, including cantonal banks, Greater information and establishing branches and subsidiaries transparency around Europe. Not only has this Four out of five integrated hybrids strategy been costly and the benefits to 61% recognised that clients want See growth opportunities in be realized in the long-term, many banks simpler to understand, less risky addressing new client segments have been caught by surprise by the and types products. Perhaps this is due to the regulatory burden, funding costs and experience of these banks in foreign 16 Private Banking in Switzerland – Quo vadis?
96% See clients are demanding increased transparency from their bank and simpler to understand markets, that they can bring to bear To date, the Swiss private banking products in Switzerland. Interestingly, it was sector has typically done a good largely the integrated hybrids that were job at satisfying its clients’ needs. and sizes. Fifty seven percent of instrumental in creating some of the However, further improvement is respondents agreed that clients are more complex financial products in the necessary if the sector is to retain demanding greater fee transparency. past. In our opinion, a combination of its lead over competitors. As liability Fifty percent of clients are also regulation and market pressure has led claims are on the increase, there is increasingly challenging the traditional them, and others, to be more realistic more regulation, and greater client “all-in” fees and bundled services. about current client expectations. demands for regular and transparent However, “all-in” fees can have reporting, action is required. It seems advantages in the context of An overwhelming 88 percent of that aside from regulation, it is also the discretionary mandates and it is respondents across all segments clients themselves who are demanding interesting to note that pure players agreed that clients increasingly value such. This runs contrary to the views saw this threatened by clients. reporting that is analytical, frequent, of many smaller banks. Perhaps they clear and comprehensive. Meeting have not yet been confronted with We explored one of the well-known these expectations will for many banks real challenges in this regard, or they themes that private banking clients require investment in processes and perceive themselves as already offered are not overly concerned with price if systems. Above all, it is a case of the required comprehensiveness. quality, service and satisfaction criteria the bank obtaining the information it are met. Of all banks surveyed, only needs, rather than simply a matter The industry’s viewpoint on fees 18 percent disagreed with the notion of technology. The current economic and transparency: that clients are increasingly demanding crisis and the consequent regulatory When it comes to fees and fee reductions. Therefore, clients are and other pressures make the quest for transparency there are some stark challenging the private banks on the information ever more critical. differences amongst segments value they receive relative to fees.
Chart 10 – Business and Operating Models: Client issues
All respondents
100%
93 88 89 80%
75 Client recognizes differentiation from other banks 60% 64 61 Expand “open architectures” service offerings Client centricity more crucial for success 40% Lower risk products more important to clients
20% Client reporting: client value more comprehensive, analytical and frequent Client advice: client value more comprehensive advice, 0% assessing risk, objectives and information Private Banking in Switzerland – Quo vadis? 17
“The client and bank can have a very different perception of value in a private banking relationship. For example, banks proudly state that their value lies in stability, brand etc. However, clients tend to place a higher value on the more tangible items such as excellent and error free reporting as one Interestingly, when we examined the increasingly demanding fee reductions way in concretely measuring pure players we saw similar responses versus the small-medium banks what’s being done with their that clients were in fact demanding fee that experience this more by almost assets. This value should not be reductions. The integrated hybrids are threefold. However, on attitudes under-estimated.” essentially in their own class as they towards greater fee transparency there CEO of a large Integrated see clients asking for less then half is no real difference across the banks Hybrid the fee reductions. However, they also and they agree that this is one of the admitted that clients are demanding catalysts for change. increasing transparency about their fees. The differences between the 88% large and small-medium bank paints a Believe that clients value reporting similar picture. Large banks see that which is comprehensive, analytical only 21 percent agree that clients are and frequent
89% 57% 40% Believe clients are expecting See an increasing trend that See an increasing trend that clients comprehensive advice regarding clients are demanding greater fee are demanding fee reductions their investment objectives & transparency transparent information on risk 18 Private Banking in Switzerland – Quo vadis?
Section 3: Private banking business models and their propositions
Business model differences: value Important features include client cross- Value propositions: in terms of proposition characteristics selling, market access and leverage size (AuM) of bank In order to illustrate the diversity of the expertise across the group (such as Swiss private banking sector, we have from their investment banking and Secrecy and discretion: analyzed the survey participants’ asset management businesses) for the ■■ Small-medium: 50 percent responses based on value propositions benefit of bank and client alike. include in their value proposition and have segmented the various ■■ Large: 79 percent do not include business models into three broad groups: Pure players: client orientation and it in their value proposition centricity is their top priority and USP Integrated/hybrids (primarily global while they also rely on discretion and Brand reputation: players): rely on their brand reputation secrecy advantages coupled with a ■■ Small-medium: not the deciding and attach relatively high importance solid brand reputation and stability. factor (50 percent) to client orientation and centricity. They also believe that providing ■■ Large: attach the same They further distinguish themselves “independent” advisory to their clients importance (50 percent) from other types as they do not focus is important and are prone to expand their value proposition on secrecy. “open architecture” offerings. Client centricity: ■■ Small-medium: also important (57 percent) ■■ Large: attach greater importance Chart 11 – The most important aspects of the current private banking value proposition (86 percent)
Client-orientation / centricity 71 Quality of service: Brand reputation 50 ■■ Small-medium: only slightly more
than for one third (36 percent) Quality of advisory service 39 ■■ Large: important for more less Stability 36 than half (43 percent) Secrecy / discretion 36
“Open architecture” products 32 (i.e. offer third party products)
Proximity to client 14
Own portfolio/asset management services 14
Fee structure / price 11
Favourable regulatory domicile in Switzerland 7
Other 7
Specialised niche proprietary products and 4 services
0 10 20 30 40 50 60 70 80
Percentage Private Banking in Switzerland – Quo vadis? 19
40% 60% Believe that private banking has Believe that the “pure player” become more of a commoditized advisory model will gain market Private banking operations business share over the next three years of universal / cantonal banks: distinguish themselves from the other to have focused on this already over 75 percent of them believed clients two types through their proximity to recent years, and about half intends acknowledge the differentiation of their clients (i.e. within a region) and quality to pursue changes in the next three bank over others. The obvious question of service promise. Stability is a further years. The test will be whether the here is whether banks may falsely USP, though they focus less (relatively modified propositions of pure players believe they are unique. speaking) on client orientation and will stand the test of time given the centricity. They also consider secrecy number of changes the private banking Which business model will likely and discretion to be important. sector is undergoing. gain private banking market share in the next three years? What is being changed and by No “one size fits all” Sixty percent of respondents agreed whom? The suitability and potential prospects that the pure player model would be In terms of changing business models of a bank’s business model can be the one to gain market share over the and approaches, just fewer than 60 determined by a number of factors, next three years. Interestingly, the pure percent of respondents intend to including transparency, reputation players themselves were mixed in their change their value propositions in and differentiation, scale and global response, while the integrated hybrids the next three years. Large banks (64 footprint, management of conflicts of viewed the pure players’ market share percent) feel slightly more urgency in interests, and value proposition (with increase with more certainty. doing this compared to small-medium the sub-elements of brand, reputation, banks (50 percent). The greatest value proposition and distribution The life of a pure player is not without changes are expected to occur at both relationships). risks, however. They must ensure universal banks and integrated hybrids, that they do in fact provide impartial of which the hybrids by and large have While 40 percent of respondents and independent advice which clients not changed their value proposition in held that private banking is becoming expect. Those that lack the scale to the recent past. Pure players appear more of a commoditized business, modify USP or are found to push too
Chart 12 – Which business model will gain market share in the next three years?
70% 60% 60% 50% 50% 40% 30% 20% 28% 29% 10% 0% “Pure Player” The Integrated Hybrid model Universal bank Independent Swiss private banking (i.e. integration of investment Asset Management firms advisory model banking, asset management & private banking divisions) 20 Private Banking in Switzerland – Quo vadis?
many “own” products are especially is the provision of impartial advice. for international on-shore expansion. vulnerable in this age of transparency Respondents also perceived an Overall, the respondents approached unless the bank can demonstrate to improvement in professionalism among this in two groups. Thirty six percent a more inquisitive client base that independent asset managers and even believed that the minimum critical size their product is the best in terms of viewed them as potential partners to should be greater than CHF50 billion suitability for the client. their own organisations. The model while another grouping of CHF10 does have its flaws. Key issues billion to CHF20 billion was as well Pure players might be hindered by include: limited scale, client lifecycle identified by 36 percent of the sample. their market reach, client segment and succession, a future of more Not surprisingly, 62 percent of the type, high fixed cost base or exposure stringent regulation and the potential large banks believed the critical size to developments in off-shore markets licence requirements may all hit the was greater than CHF50 billion and which means they must specialize industry hard. most of the integrated hybrids shared in order to succeed. Pure players this opinion. The small-medium sized consider their core competencies Critical size: the future points to group also indicated that below CHF5 to include their research, asset and larger not smaller pure players billion was not viable and only nine portfolio management function. As There are various opinions concerning percent thought a size within the range a result, more than four out of five the critical size required to run a of CHF5 billion to CHF10 billion was players have these functions in-house “multi-shore” strategy. We researched somewhat viable. The trend points and would be reluctant to consider what industry leaders believed to a larger critical size and depending outsourcing them. was a sufficient critical size for a upon the amount of markets served, private bank to provide an adequate degree of product and service offerings Mixed reactions met the proposal of range of services and products coupled with business complexity, size integrated hybrid models, with only supported with an adequate level of requirements are increasing across the 28 percent believing this model to be infrastructure based out of Switzerland industry. sustainable in gaining market share within the current environment of Chart 13 – What is the minimum critical size in terms of AuM for private banks to support enhanced transparency and avoiding international on-shore expansion? (in CHF billion) conflicts of interests. The primarily global players who adopt this model, All respondents Large banks (AuM >CHF 15 bn) CHF bn CHF bn however, believe client cross-selling, More More 36 62 market access and presence, and than 50 than 50 access to expertise, all bring real and 30 – 50 10 30 – 50 6 distinct benefits for bank and client alike. 20 – 30 11 20 – 30 13
Approximately half the respondents 10 – 20 36 10 – 20 19 believe the independent asset 5 – 10 7 5 – 10 0 manager model will grow over Less Less 0 0 the next three years. These firms than 5 than 5 are typically very small one to five person firms, often ex-CRMs from 0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 70 larger banks. The central attraction Percentage Percentage Private Banking in Switzerland – Quo vadis? 21
Section 4: The use of “Open Architecture”
Sixty four percent of all respondents When the relationship of “own” and said they intend to expand their “third party” product offering mixes 64% service and product offering via open are compared, there appears to be a Plan to expand open architecture architecture. Thirty two percent said slight tendency to actually increase offerings creating an open architecture was one the share of own product use within of their most important cornerstones the next two years. However, pure of their current value proposition. This players are also showing tendencies suggests that the idea is gaining a to increase both third party and own strong appeal. products.
Who produces the financial product In terms of offering open architecture appears to be less important than in their current value proposition, pure whether or not it is the most suitable players seem to be leading slightly product for the client. This implies here, while integrated hybrids also see more flexibility over sourcing the this as a feature. product, and a more client centric attitude. The bank will need to Interestingly, those banks that have demonstrate a product selection already made recent changes to their competence, especially if selecting value proposition indicated open one of its own products, in order to architecture as one of their top three persuade the client of its value. core value propositions. This contrasts
Chart 14 – What is your percentage of products offered that are produced “in-house” (“own” products)
All respondents
All in-house 0 60 – 99% 11 20 – 60% 33 Now 1 – 20% 40 All 3rd Party 15
All in-house 0 60 – 99% 15 20 – 60% 37 2 yrs 1 – 20% 30
All 3rd Party 18
0 10 20 30 40 50 60
Percentage 22 Private Banking in Switzerland – Quo vadis?
with banks that have not changed their value proposition recently (and do not Some product and service trends intend to do so in the future) where open architecture does not feature in ■■ Provision of transparent and independent advisory services their value proposition. ■■ Sustainable investment products
Discussions concerning product ■■ Active management of fixed income products trends resulted in wide-ranging views ■■ Capital protection and liquidity management on which will be the “next wave” that could match the higher margin ■■ Open architecture platforms structured products. No next “mega ■■ Behavioral investing trend” concerning products was identified. It should also be recognised ■■ Core and satellite portfolio management that clients may increase their risk ■■ Combining discretionary and advisory mandates appetite again once their confidence in the market, economic recovery ■■ Family office and financial planning, with tax services and their bank reaches a higher level ■■ Relocation services of comfort. There was a general consensus that the bank should not just create another product for the sake of it. Private Banking in Switzerland – Quo vadis? 23
Section 5: 93% Plan to hire Client Relationship CRM growth and excellence Managers (CRMs) over the next three years 25% Are satisfied with newly hired CRMs achieving stated client asset What’s in a name? The Client soft skills. Quite often, whole teams or transfers Relationship Manager (CRM) or the sub-teams are acquired rather than the Client Advisor? Both terms are used to individual CRM. Overall, this process describe the function that interfaces can span anywhere from one to two 61% with the client, but their role and profile years by the time clients actually Judge that their Client Relationship are undergoing dramatic changes. transfer their assets to the new Managers (CRMs) are better Across all banks, approximately 90 bank. These same pure players also at managing (“farming”) than acquiring (“hunting”) new client percent are convinced that hiring displayed relatively advanced methods, assets. CRMs to grow AuM is vital to their processes and tools to measure the organic growth strategy. performance of client relationship managers. right investment strategy and risk Furthermore, within excess of 90 preferences (i.e. behavioral finance) percent of banks expressing a firm Increasingly, asset “hunting” versus with the client. This should follow a intention to hire CRMs within the next “farming” skills of existing CRMs are highly structured suitability assessment three years, the demand for these being challenged. Sixty one percent of the client, truly assessing their individuals will be extremely high. of the respondents believed that their risk appetite and realistic investment Where will they all come from? existing client relationship managers horizon. Approximately 80 percent of were better at managing existing client pure players recognised the imperative Sixty one percent believe that the assets than acquiring new assets. behind this, acknowledging that market in Switzerland is favorable, Pure players shared the same opinion, clients expect comprehensive advice though only 25 percent have really judging that their CRMs were better regarding their investment objectives been satisfied with past asset transfer at “farming” rather that “hunting” (i.e. and to receive transparent product levels. Strikingly, a transfer rate of only acquiring) new client assets. Therefore and market risk information. This 15 percent to 25 percent was seen a change from the stereo-type “wine should lead to an improved, consistent as realistic by about 40 percent of the and dine” CRM profile could be in store client advisory experience. Despite sample (only 14 percent disagreed). and a transformation needed. There acknowledging the issue, only some This suggests that actual transfer was almost unanimous agreement banks have yet undertaken this rates are on average close to this. Pure that improvements are needed to change. players were more satisfied with their CRM’s financial qualification skill set, newly hired CRMs meeting stated increased regulatory know-how plus Asset management and optimization asset transfer objectives. a combination of soft skills in order to decisions concerning investments cope with an ever more complex future should be done by thoroughly trained During the interviews, we also in private banking. specialists, with on-going monitoring determined that a few large pure of client portfolios independent of players claimed to have average asset During the interviews, some pure whether or not there is currently a transfer rates of 40 percent. They players elaborated that their vision mandate for such. By doing this, the explained that the success is based for excellence in the client advisory private bank can demonstrate its on an holistic approach of very diligent experience centers on distancing competency and value proposition candidate selection, examining the the actual investment decision more clearly to ever more discerning potential asset quality and its history process from the CRM, with CRMs clients. plus a combination of technical and instead focussing on selecting the 24 Private Banking in Switzerland – Quo vadis?
Section 6: Cost optimization – a business imperative
Today’s market demands a robust Sixty five percent of banks see no Assuming a need for action, what is approach to cost optimization. A need to take action within the next being done about it? fundamental review of the operating three years Aggressive cost reduction measures model, embedding rigoros cost We estimate that the cost base of and strategic cost optimization do not management disciplines and functional the Swiss private banking industry (yet?) appear to have taken root. The efficiencies are all required. We between 2003 and 2007 increased results suggest that over the past year, have found that there is generally no at approximately the same rate as cost reduction measures have been of institutionalised cost cutting culture asset growth over the same period. a short-term, tactical nature. They also and little still concerning strategic cost However, from the end of 2007 to suggest that the small-medium sized optimization. Most measures tend to 2009 banks saw assets fall by an banks can afford less time to take the be of a shorter term tactical nature. average 25 percent. tough strategic decisions.
Supported by the findings of our It is commonly accepted that private As one third of the large banks survey, we believe the huge challenges banking is a high fixed cost industry indicated that they could sustain their to the private banking business largely due to its high labor costs. One current cost structure only for the next and operating models necessitate might therefore expect cost reduction one to two years, and they expect their the banks first understanding programs to be at the forefront of cost optimization measures to return their strategic direction and value many banker’s minds. Only one third a benefit only within two years, it is proposition before they can embark appeared to see the need for action questionable whether results will be upon aggressive cost reductions. More within the next two years. yielded in time. see investment in growth as taking precedence over cost control. We The results show that 42 percent Other than the larger integrated question whether this will be enough. of banks do not see sustaining their hybrid banks who displayed some of current cost structure as an issue. Fifty the more advanced approaches to percent of the large banks took this institutionalizing cost management view compared to 36 percent of their within their firm, the vast majority 52% small-medium sized counterparts. were focused on cost management Expressed satisfaction that past cost optimization initiatives have brought sustainable benefits Chart 15 – Given the economic environment, how long will you be able to sustain your current cost structure (i.e. cost income ratio)?
Not an issue 42
3 – 5 years 23
1 – 2 years 23
Less than 1 year 12
0 10 20 30 40 50
Percentage Private Banking in Switzerland – Quo vadis? 25
items. Headcount reductions and hiring reluctance might also be an indication portfolio management functions freezes played a factor and some banks that the outsourcing market in (78 percent of these large banks commented that they had used the Switzerland is insufficiently developed have targeted cost savings of less past year to review staff performance to handle the business complexities then 10 percent and the remainder and weed out under-performers. which many of the banks require. have targeted savings of up to 25 percent). This compares to fewer Outsourcing can sometimes represent Cost optimization targets over than 40 percent of the small-medium an opportunity to manage one’s costs, 2009 / 2010 – is nothing sacred? sized banks. Following this trend, the but many respondents were reluctant More than 80 percent of the large larger banks were also found to be to outsource more as they seem to banks intend to cut costs in their more aggressive in reducing costs prefer retaining direct control. This research, asset management and in their trading and operations and
Chart 16 – Percentage of respondents identifying cost reduction target ranges across the bank
39 Sales and business development 32 18
54 Client servicing 25 7
Research, portfolio management and 32 43 asset management 14
11 Trading and operations 39 39 4
14 46 Fund administration and custody services 18 7 4
11 Support functions (excluding IT) 39 39 4
14 IT and infrastructure 54 21 11
39 International locations 32 11 4
0 10 20 30 40 50 60
Percentage
Cost reduction target ranges 0 11 – 25% More than 50% Less than 10% 26 – 50% 26 Private Banking in Switzerland – Quo vadis?
support functions. This was also small banks may see limited cost On action taken to date, only slightly noticed by their heavier application of saving potential in these areas as they more than half expressed satisfaction “industrialization” (e.g. automation) usually have less staff, flexibility and over progress made with about 40 approaches to operations. By contrast scale to play with. percent not convinced either way.
Chart 17 – All respondents: key challenges and risks associated with cost optimization
Negative impact on our service level and ultimately lower revenues 75
Sustainability of achieved savings 54
Insufficient information / metrics on cost structures across the 32 organization
Resistance from employees (i.e. lack of acceptance) 29
Insufficient incentives prudent cost management 25
Insufficient upfront project investments 18
Targets are too vague, over-ambitious and not realistic 11
Other 11
0 10 20 30 40 50 60 70 80
Percentage
Chart 18 – All respondents: critical success factors for a cost optimization programme
Constantly monitoring the status of cost optimization initiatives 57
Management focus and commitment 50
Realistic goals and targets 46
Clear roles and responsibilities 36
Quality of management information on current cost base / structures 32
Communication of goals to employees 32
Good quality forecasting / measurable benefits and metrics 11
Qualification of staff assigned to cost optimization initiatives 11
Right tools and techniques 7
Other 4
0 10 20 30 40 50 60 70 80
Percentage Private Banking in Switzerland – Quo vadis? 27
Section 7: Sourcing strategies
We believe the two elements Some banks may simply not have the of the value chain (research, critical mass to attract and support asset management and portfolio such expanded, improved functions. management; and trading and operations) will be subject to many Some banks are resisting greater changes over the next three years outsourcing, partly in the belief that as banks re-assess and amend these are core internal functions and their business models. Key will be a partly due to the relatively under- decision how, and indeed whether, developed outsourcing market in to keep these functions in-house and Switzerland not providing an attractive whether they form part of the USP. alternative. This is especially pertinent given how expensive the functions are to In terms of size, 42 percent of large maintain, and in light of the fact that banks outsource the “trading and further investment is most likely operations” function compared to only needed to upgrade or enhance them. 16 percent of small banks.
Chart 19 – All respondents Sourcing strategies: targeted value chain elements over the next three years
4 Client servicing 96
14 Research, portfolio management & 86 asset management 25
11 Trading and operations 82 29
18 Fund administration and custody services 36 68
7 Support functions (excluding IT) 71 36
7 IT and infrastructure 57 54
0 10 20 30 40 50 60 70 80 90 100
Percentage
Offer in-sourcing Perform in-house Outsource 28 Private Banking in Switzerland – Quo vadis?
Sourcing outlook We would expect growth potential in The most common outsourced functions: outsourcing requirements from the small-medium sized banks as they ■■ Sixty eight percent – fund administration and custody services. may seek to avoid the need to employ This is a sign of a mature market. specialist (costly) functions and the ■■ Fifty four percent – IT and infrastructure. need for complex client reporting ■■ Thirty six percent – other support functions, excluding IT. services, best execution demands, ■■ Thirty percent - trading and operations functions. more sophisticated IT systems and the possible link up to automatic data exchange feeds. Private Banking in Switzerland – Quo vadis? 29
Section 8: Risk management – increasing importance in private banking culture
A true risk management culture is as The pure players seem to be planning products, services and client segments much about awareness and behavior the biggest changes (67 percent) represent a cross-border risk, are as it is about meeting legal and though perhaps this is in part because some of the first steps that should be regulatory requirements. the universals appear to have already taken. Those banks that manage to started making the necessary do this successfully may well be able While the majority of respondents investments in their risk management to capture new off-shore business in foresee increasing their expenditure frameworks and infrastructures. compliance with local and international and resource on risk management, However, part of the reason may also regulations. Such a move will almost this proportion (56 percent) is not as be that the pure players will arguably certainly require closer integration of high as one might expect given the face some of the biggest challenges their risk management function into the challenges facing the industry. going forward in terms of restructuring business. their business models around on-shore There is a real need for organizations to / off-shore trends. Key areas of focus go beyond the (increasingly complex) Beyond the usual primary risks such regulatory and legal requirements and Getting the risk right and under as fraud, respondents agreed that the to create a real risk management culture control in the cross-border business general risk landscape is changing. and awareness. We believe that even could be a critical success factor. Actively managing reputation risk those parties not planning to increase Going beyond compliance, revamping becomes more important in the current their spending on risk management may country manuals (which specify for environment – for banks and regulators need to re-allocate existing resource to CRMs the guidelines in carrying out alike. Given that reputational risk is meet new priorities. business abroad), and assessing which a consequence of failures relating
Chart 20 – All respondents: We intend to increase spending/resources in our risk management practices
Strongly agree 43
Agree 13
Neutral 40
Disagree 0
Strongly disagree 4
0 10 20 30 40 50
Percentage 30 Private Banking in Switzerland – Quo vadis?
to financial, business or operating Many banks acknowledged that government is rapidly revising and risks, the most effective lies in a mis-selling (i.e. MiFID’s Suitability issuing new regulations regarding comprehensive risk management and Appropriateness) should now be retrocession, incentive systems and framework covering all these aspects considered an operational and liability bonuses. and more. risk. We are aware of aproximately ten private banks which have been revising It remains to be seen whether risk and The renewed focus on risk their client advisory processes with compliance departments can cope management is in part due to the this in mind and more work is in store. with the new focus, greater workload increase in clients lodging liability and pace of change, or whether there claims, as well as public sentiment that Other identified risks include data might alternatively be a trend towards banks have done insufficient to ensure security, specifically the handling of outsourcing these tasks. effective internal controls. client data. In addition, the Swiss
Chart 21 – All respondents: Which of the following key risks will be addressed by your management procedures in three years’ time? (Please pick up a maximum of three)
Changes in regulation 83
Compliance risk (including AML and KYC) 79
Reputational risk 46
Mis-selling/inappropriate advice 38
Fee structure/price 21
Proximity to client 21
IT risk & technology advances 21
Other 4
0 10 20 30 40 50 60 70 80 90 100
Percentage Suggested process of addressing the challenges
1. Self-assessment, determine future off-shore, on-shore, cross-border strategy and scenarios.
2. Use regulation as an opportunity. Proactively approach and structure tax issues plus MiFID.
3. Derive competitive response for positioning, differentiation, target tax compliance for clients.
4. Articulate value proposition and service offering, effects of clients’ needs and transparency.
5. Define the private banking business and operating model for the future.
6. Reduce high-fixed cost base – investigate sourcing options.
7. Consider opportunities and threats of M&A options.
8. Client relationship management roles, advisory, excellence, and growth perspectives.
9. Integrate regulatory issues and compliance management across the business.
10. Implement new business and operating model changes plus monitor success.
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15.10.2009 12:09:38 kpmg.ch
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