Private banks increase their technology investments to improve their high-touch offerings for the wealthy.

A quick look at global investment performance in 2024 proves the trend that the rich are getting richer. Their preferences for wealth management are also becoming more individualized and sophisticated.

On the other side of the equation are the global private banks, which see the current mixture of massive wealth generation and increasingly complex demands as a generational opportunity. “Private banks are in a good place because they’re already ahead of the race when it comes to serving all sides of the client’s balance sheet, something that the financial industry as a whole is moving toward,” says Will Trout, director of securities and investments at Datos Insights.

Yet, reconciling growth and individualization may prove trickier than it seems, from a business standpoint. This may force banks to rethink the structure of their services and the breadth of their product offerings.

David Frame, CEO of J.P. Morgan’s U.S. Private Bank, notes that while technology will help banks scale their services more easily, top-level advisory will remain the main asset in this race. “Maintaining an intimate service offering while scaling globally requires a balance of technology and human touch,” he says. “We leverage digital platforms to enhance accessibility and efficiency while ensuring that personal relationships remain at the core of our service.”

George Walper, managing principal of strategic research at CEG Insights, agrees, adding that “as wealth increases, so does the need for more and higher-level advisory, which, for the banks, often translates into more costs.”

“Having a team of leading market researchers is crucial. They provide insights that help us understand market trends, client needs, and emerging opportunities. This knowledge allows us to tailor our services and strategies to meet the evolving demands of our clients,” agrees J.P. Morgan’s Frame.

“Scaling effectively means focusing on core strengths while remaining adaptable to individual client needs,” explains Daniel Wild, chief sustainability officer at J. Safra Sarasin. “This is a delicate balance: Growth is essential, but private banking thrives on personalization and agility in meeting each client’s needs.”

Moving ‘Upmarket’

Private banks have been targeting clients with more than $25 million in investable assets—or moving “upmarket,” as the industry jargon goes—to sustain growth while balancing the scale and personalization of their services. “Banks are moving upmarket because that’s where the margins currently are, considering all the demands they need to attend to in their journey toward a more holistic offering,” explains Walper.

But it’s not about margins only, notes Dennis Gallant, an independent adviser for the private banking industry. “As advisory becomes more holistic, it’s natural the banks move upmarket, mainly because that’s where they can demonstrate real value.”

The increasing suite of demands from the clients also translates into less fidelity to the institutions with which they do business. “Ultrarich clients will seek the best proposal each bank has to offer, particularly in a world where localization matters so much,” explains Wally Okby, strategic adviser at Datos Insights.

Banks focus on improving their offerings’ holistic aspects to reconcile these demands. However, finding the proper market may also prove tricky. “There’s a lot of wealth creation in the world. Banks are being forced to offer a much more family-office type of holistic planning to the affluent, so they expand their services to offset the costs,” adds Gallant.

“That holistic offering extends well beyond financial services and into all aspects of the client’s life, even into medical services or other areas in which influence can help bring enduring personal-level relationships, which is the core of the business,” explains Walper.

However, as Walper notes, figuring out the business side of scaling holistic banking services can prove the next frontier of growth for the private banking industry. “There’s a lot of market share to be gained in the $10 million to $25 million segment, particularly once the banks figure out how to leverage these models created for the superwealthy at a lower cost.”

Booming Family Offices

The demand for more holistic services for the ultrarich has been making waves in the market in recent years. In fact, according to the latest research by Deloitte, the number of single-family offices worldwide has grown a massive 31% since 2019; and they are projected to reach $5.4 trillion in assets under management (AUM) by 2030. This represents a 73% increase from $3.1 trillion today and is expected to surpass the total AUM held by hedge funds.

Rather than trying to compete with this family-office boom, banks have been extending their networks to offer support to these clients through family offices, as notes Ryan Lemand, co-founder and CEO of Neovision Wealth Management: “The relationship between family offices and major banks is evolving in fascinating ways. Rather than competing, we’re seeing more partnerships emerge, especially in the American market.”

He further notes that finding suitable space to accommodate individual clients and family offices simultaneously presents notable challenges in the ultrarich segment. “While this creates immediate benefits for both sides, there’s a catch—banks might find their resources stretched thin over time, and they risk losing business if family offices bring more services in-house,” adds Lemand. “Given that family offices control assets worth more than $6 trillion globally, any shift in this dynamic could seriously impact bank revenues.”

At the same time, however, competing against family offices may prove a problem, as Gallant notes. “Tightening margins in the private banking industry and the need to differentiate have been raising the bar for the industry as a whole, at which point it gets tricky to compete against family offices just because they have the edge of having fewer compliance risks.”

Tech May Bridge The Gap

In a recent paper published by global research firm KPMG, the authors find that 78% of the surveyed banks in the US believe digital transformation is essential to meet changing customer expectations while strengthening cybersecurity.

“The digital security challenge can’t be overstated. Private banks are pouring money into protective measures—industry experts predict spending on financial cybersecurity will top $43 billion by 2026,” says Neovision’s Lemand.

However, while new technologies can help produce investment and margins, private banks may be able to leverage big data modeling more effectively for personalized offerings.

Data Insights’ Okby notes that while technology is key in product offerings, it may be even more essential to structure the bank’s holistic offerings individually. “The concept of personalization needs to go through data strategy and technology integration. That way, the banks can extract insights from the data not only to know which products to offer but also to tailor their R&D processes based on these insights, eventually building a more holistic experience altogether.”

Lemand adds that while new technologies are being used on the investment side, they are also vital in providing insights into clients’ preferences that will later be transformed into personalization. “To grow on a global scale while keeping that personal touch, banks are embracing digital tools that help them understand and serve clients better.”

As J.P. Morgan’s Frame concludes, technology alone will not solve all challenges in the private banking industry. However, it may help leverage personalization, improving the industry’s services. “By leveraging data and analytics, we can offer more personalized and effective solutions, ensuring that we remain at the forefront of the industry.”

Methodology

Global Finance staff select the winners for these awards based on entries submitted by banks, as well as company documents and public filings. We consider local market knowledge, global footprint and investment breadth and sophistication. Because metrics are rarely public in this sensitive corner of finance, we incorporate perspective from analysts and consultants. Performance data are also drawn from industry sources, including Scorpio Partnership’s annual Global Private Banking Benchmark and Asian Private Banker magazine’s regional league tables. Size and growth are a factor, but Global Finance also considers creativity, uniqueness of offering and dedication to private banking as a core business either globally or regionally.

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