Success in private banking: scale or niche?
The Switzerland and Liechtenstein private banking industry reveals many players in the market are under increasing stress.
Though market consolidation remains an enduring trend, the frenetic pace of recent years has abated somewhat. The industry's total profit pool, however, remains more or less unchanged over a six-year horizon. And with private banks being able to reduce their cost base on average but finding their income levels falling even faster – resulting in a higher cost/income ratio – banks of all sizes clearly need to work harder than before to achieve the same level of profit.
The strategies of success seem to be either scale or niche, given the marked tendency towards the poles. The private banking units of the two global, universal banks and the very small private banks turn out to be the most profitable in our sample, while medium-sized private banks are well and truly 'stuck in the middle'.
This report sheds light on developments in the Swiss and Liechtenstein private banking market since the end of 2015. It presents a condensed update to the widely acclaimed study we published in Q3 2016 based on a five-year analysis of relevant key performance indicators across individual banks and bank segments.