With growth in demand for private banking services in emerging markets owing to the changing wealth distribution patterns, private banking sector is going great.
KPMG International, the professional services company, revealed that with $100,000 Billion worth of assets with wealthy individuals, the global private banking and wealth management sector will continue exuding confidence even as uncertainty grips the financial markets in the coming three years between 2008 and 2010, as reported by Ameinfo.
Industry experts observed that changes in wealth distribution patterns are responsible for boosting demand in private banking services, particularly in the Middle East. The number of high-net worth individuals in emerging markets like the Middle East is increasing on the strength of population growth, booming construction and property segment and soaring oil prices.
Asia, the Middle East, Russia, Arabian Gulf and Eastern Europe have the highest confidence levels backed by the biggest growth potential. This has led to easing of competitive pressure for smaller banks reducing their urgency to find partners.
The growing middle class population in countries, including the UAE, Bahrain and Jordan, is helping the sector leaders remain bullish in the global private banking industry. In order to meet the increasing expectations of investors, private bankers are turning to organic growth as well as expansion through acquisitions in new markets.
The private banking sector is also experiencing growth due to the increasingly irresistible nature of Mergers and Acquisitions (M&A) strategies - they enable institutions to use an acquisition for expansion of customer base instead of having to wait much longer by initiating new relationships organically.
However, the immediate future presents a challenge for the private banking sector with the potential threat of economic uncertainty facing smaller institutions. Fixed costs for intricate IT systems, intensified pressure to fulfill regulatory compliance initiatives and costlier competition for employment of experienced wealth managers may lead to a crisis should a downturn occur in the global markets.
In the view of a Research Analyst at RNCOS, “Innovative strategies and consumer services are triggering a boom in the global banking sector. Private banking services, particularly in the Middle East, are experiencing growing demand, thanks to changing patterns of wealth distribution. With increasing competition in the banking industry, banks are compelled to woo customers, eventually proving advantageous to the private banks.”
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