Between efficiency and excellence: the challenge for private banking in the value for money era
In recent years, private banking has undergone significant, albeit quiet, change. A combination of increased regulation, ever-tighter margins and more demanding clients is reshaping the business model. The concept of value for money, driven by European regulation, marks a clear turning point: it forces institutions to demonstrate that the cost of their services is justified by the value they deliver. At the same time, clients now expect personalisation, seamless digital experiences and highly specialised solutions. How can private banks strike the balance between efficiency and excellence in this new environment?
The idea behind value for money is straightforward: investors should receive a level of service that corresponds to what they pay. For institutions, this means reassessing fees, costs and internal processes. The challenge is twofold: maintaining profitability in an environment of tighter margins, while ensuring the service does not drift towards a “standardised” offering.
If everything comes down to price, the risk is obvious: losing the essence of premium advice. Differentiation can no longer rely solely on brand or personal relationships; it must be grounded in a tangible, measurable and defensible value proposition that stands up to scrutiny from both the regulator and the client.
As regulation tightens, the client is becoming more sophisticated. Today, offering a diversified portfolio is no longer enough. Investors expect real-time digital information, access to tax specialists, sustainable solutions, succession planning and, increasingly, alternative assets. In addition, the overall experience needs to be tailored to individual preferences.
This degree of personalisation comes at a cost. It requires time, specialist knowledge and robust technology. This raises the question: how can private banks offer more value with less margin?
The answer lies in rethinking the model and strengthening the value proposition. Being efficient is no longer enough — differentiation is essential. Clients need to feel they have access to exclusive ideas and strategies they won’t find in every institution. This is where open architecture becomes crucial, giving clients access to best-in-class funds across all categories, free from internal constraints. Being able to choose from global leaders in equities, fixed income or alternatives is a real advantage.
In this context, the role of the adviser is more important than ever. It is not only about selecting products, but about determining when an index-based approach is appropriate and when active management can add greater value, or which geographical region is likely to benefit most from its macroeconomic backdrop. Knowing how to read market signals and adjust the strategy accordingly is what separates a standard service from truly professional advice. This is what turns an adviser into a genuine creator of value.
Technology is a powerful ally in this process. Advanced analytics tools, artificial intelligence for dynamic rebalancing and monitoring systems all help ensure that decisions are taken with greater accuracy and speed. The aim is not to replace the banker, but to free them from repetitive tasks so they can focus on what truly matters: the client relationship and strategic advice.
To achieve this, several levers come into play: technology as an enabler: automation, AI and analytics to streamline processes and enhance decision-making; hybrid models: combining discretionary management with personalised advice to offer both flexibility and efficiency; smart segmentation: tailoring the level of service to wealth, complexity and expectations; and radical transparency: clearly explaining what each service includes and how its cost is justified, reinforcing trust. An informed client is less sensitive to price when they perceive real, distinctive value.
Ultimately, the future of private banking will not involve choosing between efficiency and excellence, but integrating both. The institutions that succeed will be those able to combine optimised processes with a personalised, human experience. It is about turning private banking into a form of digital craftsmanship: technology serving the relationship, not the other way around. Above all, it means preserving the essence of our work: bringing unique ideas to the table, selecting the best the market has to offer, and demonstrating that active management and index-based strategies (when combined intelligently and supported by innovation) offer a compelling route to value creation.