Abstract
Overview
Introduction
Wealth managers' investment expertise and boutique environment can often lead
them to establish market leading in-house services and bespoke investment
product capabilities. However, with these products unavailable to the rest to
the market wealth managers often miss out on the full benefits that this
expertise can bring.
Scope
- Covers the issue of insourcing with examples from Germany and Switzerland.
- Includes insight from executives of several major banks.
Report Highlights
Insourcing provides an opportunity to offset at least some of the huge
investments that the large banks have to feed into IT systems and compliance
issues, and analyst teams. Insourcing is expected to increase in the coming
years - those who forge relationships now will find themselves in a much
stronger position as the market grows.
A key differentiator is essential for the customer bank to see a benefit in
outsourcing. UBS, for example, considers its key advantage to be the front to
back solutions which are offered for several product segments. Since pure
transactions are commoditized, UBS focuses on high quality front end services,
such as top research, analytics and advice.
Reasons to Purchase
- Gain insight into the pros and cons of insourcing in the European market
- Understand how insourcing is currently being managed by major banks
- Discover how to maximise the potential offered by insourcing
Table of Contents
- CHAPTER 1 INSOURCING TODAY
- In which areas is insourcing being offered?
- Banks have become involved in insourcing along all parts of the value
chain
- In focus are the less critical middle and back office operations
- Under certain circumstances, insourcers can give input on front
office activities
- ...but some have moved into the IT services area, facing competition
from IT companies
- Swiss private banks have brought insourcing to the full wealth
management spectrum
- The requirements for international offerings are very complex
- Smaller players have developed innovative solutions
- Differentiation centres around market knowledge and cost reduction
- Why (not) consider insourcing?
- Economies of scale are the main driver for insourcers
- Benefits for client banks
- Cost reduction makes one case for outsourcing
- ...but risk management and increased efficiency are also important
- Some retail banks seek access to wealth management know-how
- There are risks to both parties
- Outsourcing banks bind themselves to one service provider
- Outsourcing banks could lose customers to their partner bank
- Errors in the IT system could put the insourcing bank out of business
- The insourcing bank could experience a knowledge drain
- Making insourcing services profitable
- It is not a fast moving market
- The key challenge for insourcing banks is the mindset of potential
partners
- The decision to outsource is not an easy one
- The competitive situation can hinder the take-up of insourcing
services
- Insourcing solutions have to be modular to be successful
- Are the available IT systems suitable for insourcing?
- It is difficult to cover the complexity of the investments sector
- Training of the partner bank' s sales staff can be very time-consuming
- What can support growth of insourcing relationships?
- Making use of existing relationships
- Developing other geographies
- New product and service opportunities
- Deterioration of the financial markets
- Key considerations for insourcing services
- IT system infrastructure must be appropriate
- Potential insourcing business must have demonstrable a USP
- There must be a potential client base of willing outsourcers
- There must be board level commitment to launch an insourcing business
- Once the agreement is in place, communication and knowledge flow are
critical
- CHAPTER 2 KEY PROVIDERS
- Bank Vontobel: the allrounder
- Co-operation management is part of Asset Management & Investment
Funds
- More insourcing co-operations are to follow
- Co-operation with the Raiffeisenbanken is Vontobel' s model case
- The Raiffeisen Group uses the Vontobel brand
- Vontobel develops products and services that are suited to the
Raiffeisen clientele
- Vontobel' s support of distribution and marketing plays a central role
- Vontobel has entered a new strategic partnership with T-Systems
- VONSYS - Vontobel Solutions for Your Sourcing
- Credit Suisse: Expert to Expert Banking
- Credit Suisse is one of the Top 10 financial services companies by
assets under management
- Credit Suisse restructured its interbank services in 2005
- Expert to Expert Banking has become part of a dedicated Financial
Institutions department
- Expert to Expert Banking combines expertise from asset management to
trade finance
- Trust plays a very important role
- Some areas of Expert to Expert banking have a domestic focus
- Credit Suisse can use independent private banks within the Group to
test-drive services
- Wealth Team View
- Maerki Baumann & Co. AG: indepedence is key
- Banking services are going independent
- Transaction banking will become an independent entity: InCore Bank AG
- MBC has developed Legando, its proprietary IT platform
- Only a few partner banks take the full outsourcing approach
- Zuger Kantonalbank uses the most comprehensive service
- Pricing does not increase with the number of transactions
- Insourcing can add most value through administrative services
- MBC' s insourcing services had a difficult start
- MBC sees its independence as a key differentiator
- MBC is looking across the frontiers
- Wealth Team View
- UBS: The Bank for Banks
- UBS is currently the world' s largest asset manager
- The Bank for Banks service includes an extensive range of services
- UBS' s differentiator is the front end
- UBS is looking into new markets and product areas
- Wegelin & Co.: not to be sneezed at
- Small but powerful
- Insourcing to gain economies of scale
- Different types of co-operations exist
- Special case: Bank Linth
- Business Process Outsourcing
- SPtailormade
- A less favorable investment climate could force smaller banks to
rethink their strategy
- Efficient data management is a challenge
- Wealth Team View
- APPENDIX
- Definitions
- Research methodology
- Further published research
- Global Wealth Management SPP
- Interactive Databases
- Market Reports
- Strategic Insight Reports
- Wealth Management Competitor Tracker
- SPP writing team
- List of Tables
- Table 1: Bank Vontobel AG: Key figures, 2004-5
- Table 2: Credit Suisse: consolidated key figures, 2004-5
- Table 3: Maerki Baumann & Co. AG: Key figures, 2004-5
- Table 4: UBS Group: Key figures, 2004-5
- List of Figures
- Figure 1: Positioning of key insourcing providers, 2006
- Figure 2: Pros and cons for both sides
- Figure 3: Key challenges for insourcing services
- Figure 4: The VONSYS business model, 2006
- Figure 5: Expert to Expert Banking: Products and services, 2006
- Figure 6: Legando: connectivity and integration, 2006
- Figure 7: Legando modules, 2006
- Figure 8: UBS: The Bank for Banks services, 2006
- Figure 9: The Bank for Banks: Private Banking services, 2006
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