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Insourcing in Wealth Management 2006

Published by: Datamonitor

Published: Nov. 27, 2006 - 52 Pages


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
Wealth Team View
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
Wealth Team View
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
Insourcing
Kantonalbank
Research methodology
Further published research
Global Wealth Management SPP
Interactive Databases
Market Reports
Strategic Insight Reports
Wealth Management Competitor Tracker
Datamonitor Asia Pacific Wealth Management SPP
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

Abstract

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.
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 maximize the potential offered by insourcing


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