Europe’s leading banks are focused on new technology to meet shifting client needs. By Jonathan Gregson
Market volatility and sharply higher interest rates had the biggest impact on European private banks’ performance over the past year. Overall, the results were mixed. Adverse market conditions drove assets under management (AUM) from their 2021 peak, although this was partly counterbalanced by a modest increase in net new money from clients. Practically all private banks reported that fee and commission income dropped sharply, alongside gains from improved lending margins.
The question is how long the aforementioned tailwinds will continue to affect profits in the face of rising costs across the industry. Europe’s private banks face a pressing need to invest further in technology if they are to address both new regulatory requirements and clients’ rapidly shifting needs.
Balancing increased IT spending while sustaining profitability will be crucial in the coming years. Several major European banks have already shuttered their private banking units, such as ABN Amro’s Asia-Pacific units and Lloyds’ Swiss business—and further consolidation is expected.
Best Private Bank In Western Europe: BNP Paribas
The eurozone’s leading private bank by AUM and the clear market leader in its core French and Benelux markets, BNP Paribas Private Bank has benefited from a 48% surge in net new money and higher interest margins over the past year.
Thanks to its ability to leverage groupwide technology upgrades, the unit has achieved significant synergies, resulting in an 8% boost to its overall profitability. The bank has focused on accelerating its move upmarket, developing an increasingly sophisticated offer, including credit structuring and tailor-made financing packages, that caters to the needs of its wealthiest customers.
Recognized as a regional leader in client-focused platforms and in digital channels that provide personalized communication between manager and client, BNP Paribas recently launched a portal dedicated to alternative investments, including private equity and debt.
Best Private Bank For Sustainable Investing: BBVA
BBVA is ahead of the curve in meeting the EU’s strict Sustainable Finance Disclosure Regulation, having launched a digital channel for regulatory compliance, tracking clients’ sustainability risk data so they can adjust their exposures accordingly.
The bank is also increasing its offering of sustainable alternative investments. Private clients can now secure better mortgage terms if the property in question has a high energy-efficiency certification. The same goes for BBVA’s consumer loans, which feature better rates when used to purchase electric or hybrid vehicles.
BBVA emphasizes sustainability as central to its client offering. Many of its pension fund clients are deeply committed to sustainability. The bank now offers them multiple investment solutions incorporating environmental, social, and governance (ESG) criteria. Several of BBVA’s in-house mutual funds, moreover, are committed to impact-investment strategies; and all its private bankers are now required to hold an external sustainability certificate.
Best Private Bank Digital Solutions For Clients: BNP Paribas
BNP Paribas’ private banking unit has prioritized facilitating its customers’ transition to higher-end services, and new technology precisely targeted at individual clients’ needs is central to the effort.
Already recognized as a leader in developing client-friendly platforms that offer a unique personal communication channel between the private bank and its clients, BNP recently launched a dedicated digital portal for private equity and debt investors.
On top of a broad range of investment options managed in-house, the bank has also embraced innovative tie-ups with third-party specialists to provide digital solutions. These include MyMand@te, a discretionary portfolio management offering; Mon Demain, a platform dedicated to retirement preparation; a carbon-footprint calculation engine developed with Greenly, a climate software developer; and an innovative digital safe with Cecurity, a developer of software designed for secure exchange and archiving of electronic documents.