A growing number of global banks are combining various business segments with the aim of servicing private clients across the full wealth continuum. This is a «superior model» compared to the standalone private bank, according to Standard Chartered’s Marc Van de Valle.
In January 2021, Standard Chartered announced that it would create a new unified unit that would combine consumer, private and business banking (CPBB) into a single entity. Other banking rivals have also made similar moves to integrate various businesses to achieve scale.
«20 years ago in Europe, there was a clear trend of standalone private banks slowly being integrated or merged with retail banks,» said Marc Van de Walle, global head, wealth management, deposits & mortgages, Standard Chartered Bank, in an interview with finews.asia.
«I think this is a superior model because it enables coverage of the full client continuum as well as sharing of costs and infrastructure.»
Internal Referrals
One noteworthy difference in the integrated model is that there are more effective incentives that can be implemented to encourage referrals between segments as well as geographies.
«If you are a relationship manager at a standalone private bank within a larger financial group, you will never get referrals from branches or the SME (small and medium-sized enterprise) and corporate business,» Van de Walle recalled.
Product Platform
Another benefit of the integrated model is the ability to share costs and infrastructure, especially with regard to the product platform.
«We felt that there was a lot of commonality across these segments and, more importantly, that we could serve clients under a common product platform,» he explained. «Let’s say, for example, that you want to buy the stock of a company. It’s really no different whether you are a retail banking, private banking or SME client. There’s no point having different processes and platforms for different segments.»
In addition, the unified platform has also liberalized access and helped the bank tap demand for products that were previously not available to certain segments. For example, Standard Chartered began to offer alternative investments to clients outside the private bank at scale in 2020. And in 2022, it launched a discretionary portfolio management solution to clients in unitized form for smaller ticket sizes.
Business Performance
As a result, the bank is seeing returns from its integrated model.
In the first six months of 2023, new-to-bank clients increased by two to three-fold depending on the geography. North Asia has seen strong inflows, driven by the reopening in China. Asia has also been a source of significant inflows for the ultra-high net worth business. Net new money from the affluent segment has more than doubled.
«Historically, many banks, including us, have built different product platforms for different client segments and have also had different platforms in different geographies,» Van de Walle said.
«But now, we are putting all these segments and geographies together to leverage efficiencies and scale from a single, unified platform.»
