The Development of Private Banking & Wealth Management Industry from the Beginning of the 21 Century Till the Covid-19 Pandemic

Abstract

The scope of study in this paper is the Private Banking & Wealth Management (PWM) business segment. This work aims to illustrate the key trends in the PWM industry financial performance in the period 2000–2021 by focusing on the opportunities and challenges for its development. The relevance of the topic is justified by the constantly increasing wealth on a global scale and the increasing commitment of financial institutions to provide services to high-net-worth individuals (HNWI). The uniqueness of the paper is based on the fact that the problems discussed have been traditionally underestimated in scientific literature due to the lack of sufficiently organized data and the frequent presence of unclarities in the distinction between Retail Banking and Private Banking. Furthermore, this is one of the few scientific publications that try to evaluate the impact of COVID-19 on the wealth management business. This article uses the methods of analysis, synthesis, induction, deduction, observation, and analogy. The study is based on a wide variety of information resources, including specialized scientific literature, results from studies made by reputable consultancy companies, and information from the international PWM practice available in the public domain. The author has concluded that despite the context of the financial, economic, and healthcare crises that have happened over the past two decades, currently, wealth management continues to be among the most profitable businesses for banks. However, despite the good results, certain alarming trends have been demonstrated during the studied period, which raises several questions regarding the long-term financial prosperity of the institutions in this sector. The most prominent of them are the high levels of the Cost/Income ratio, the unfavorable changes in the pricing models, and the increasing levels of client migration.