A report suggested that a novel outsourcing approach for private banks could deliver innovation, agility, improve the experience for investors and banking staff and enable flexibility in generating new revenue streams.
The report by Deloitte Luxembourg and end-to-end wealth management platform FNZ draws insights from illustrative case data and analyses public financial data from 30 global private banks, representing over $5 trillion in client assets.
The report underscored the inevitability of operational changes for private banks in response to technological advancements and evolving client expectations. Operational rigidity, with up to 70-75% fixed costs, prompted the need for adaptability in frameworks. As a result, outsourcing strategies gained traction, aiming to introduce flexibility into operational bases and address persisting challenges in cost reduction and efficiency.
Pascal Martino, partner and banking and human capital leader at Deloitte Luxembourg, added: “Adopting a new end-to-end wealth platform is a transformative approach that integrates technology and operations, including advanced APIs, data analytics, core banking, and digital solutions into one, all within a regulated financial institution.”
According to the findings, end-to-end outsourcing not only addresses costs but catalyses greater agility, security and innovation in banks. Modern approaches align technology, operational processes and talent, allowing banks to focus on deepening client relationships and revenue generation. These strategies also expedite the time-to-market for new products and services, ensuring robust regulatory compliance and strategic flexibility.
The report concluded that by integrating end-to-end platforms into their value chain, banks can leverage emerging technologies like AI, cloud computing, advanced data analytics, and open data APIs to their advantage.
Patrick Laurent, Partner and Innovation Leader at Deloitte Luxembourg, commented: “By transitioning from a high fixed-cost model to a more dynamic operational base, it is possible to boost agility and at the same time to access up-to-date expertise, technology and resources.”
Philippe Bongrand, managing director, private banking at FNZ, added: “What we show with this report is that piecemeal outsourcing isn’t very effective, but full end-to-end platforms make sense for private banks who want to combine scale and agility in a much more resilient and regulated way.”
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