Olaf Toepfer: «Transformation Is Unobtainable for Some Banks»

Olaf Toepfer: «Transformation Is Unobtainable for Some Banks»

It’s not that simple. Wealth management clients today receive a great deal more with similar conditions and higher regulatory demands.

In a fiercely competitive and saturated market, companies are forced to optimize the added value for customers to gain market share. The transformation to a more customer-centric business model is a highly complex process for many providers and may not be achievable for some of the companies.

Why?

The more complex an organization, the more difficult it is to achieve a sustainable change of business model: culture is stronger than strategy. This doesn’t mean that there shouldn’t be product centric segments. It makes sense in investment banking – to the advantage of clients.

«Car manufacturers produce only what is important for their value proposition»

How should wealth managers differentiate themselves from each other?

What is decisive is their value proposition. It determines where they stops doing things themselves. There will be banks that increasingly see themselves as tech companies, others will focus exclusively on the client business.

You said that banks should take their cue from the car industry.

We always have to be very careful with comparisons between industries. But for sure, car manufacturers have specialized and produce only what is important for their value proposition – no carmaker produces tires for instance.

And what is the situation in banking?

A great number of companies are still producing almost the entire value chain. But what wealth manager is seen as particularly trustworthy due to a superior payment service settlement or securities settlement?

In other words, the future in banking will be all about segmentation?

The goal of segmentation is to strategically create the most homogenous target group in a bid to serve this group optimally. Segmentation enables different business models.

«There hardly any trustworthy examples for this in wealth management»

An example?

Ultra-high net worth clients: the core of the business model is the solution of complex questions of wealth management. By contrast, affluent banking has the provision of solutions at its core and retail banking is and will remain a products business.

What about fintechs?

Fintechs usually specialize in specific aspects of the value proposition. There hardly any trustworthy examples for this in wealth management. The chance that fintechs will be able to engender enough trust to build large amounts of assets is very small, I think.

Olaf Toepfer has been a partner at EY Switzerland for three years and is responsible for the banking industry and capital markets. The German citizen previously worked at Roland Berger as senior partner and head of financial services Switzerland.