Introduction

Wealth managers' investment expertise and boutique environment can often lead them to establish market leading in-house services and bespoke investment product capabilities. However, with these products unavailable to the rest to the market wealth managers often miss out on the full benefits that this expertise can bring.

Scope

*Covers the issue of insourcing with examples from Germany and Switzerland.

*Includes insight from executives of several major banks.

Highlights

Insourcing provides an opportunity to offset at least some of the huge investments that the large banks have to feed into IT systems and compliance issues, and analyst teams. Insourcing is expected to increase in the coming years those who forge relationships now will find themselves in a much stronger position as the market grows.

A key differentiator is essential for the customer bank to see a benefit in outsourcing. UBS, for example, considers its key advantage to be the front to back solutions which are offered for several product segments. Since pure transactions are commoditized, UBS focuses on high quality front end services, such as top research, analytics and advice.

Reasons to Purchase

*Gain insight into the pros and cons of insourcing in the European market

*Understand how insourcing is currently being managed by major banks

*Discover how to maximize the potential offered by insourcing

CHAPTER 1 INSOURCING TODAY 9
In which areas is insourcing being offered? 9
Banks have become involved in insourcing along all parts of the value chain 9
In focus are the less critical middle and back office operations 9
Under certain circumstances, insourcers can give input on front office activities 10
...but some have moved into the IT services area, facing competition from IT companies 11
Swiss private banks have brought insourcing to the full wealth management spectrum 12
The requirements for international offerings are very complex 12
Smaller players have developed innovative solutions 12
Differentiation centres around market knowledge and cost reduction 13
Why (not) consider insourcing? 13
Economies of scale are the main driver for insourcers 14
Benefits for client banks 14
Cost reduction makes one case for outsourcing 14
...but risk management and increased efficiency are also important 15
Some retail banks seek access to wealth management know-how 15
There are risks to both parties 16
Outsourcing banks bind themselves to one service provider 17
Outsourcing banks could lose customers to their partner bank 18
Errors in the IT system could put the insourcing bank out of business 18
The insourcing bank could experience a knowledge drain 18
Making insourcing services profitable 19
It is not a fast moving market 19
The key challenge for insourcing banks is the mindset of potential partners 19
The decision to outsource is not an easy one 19
The competitive situation can hinder the take-up of insourcing services 19
Insourcing solutions have to be modular to be successful 20
Are the available IT systems suitable for insourcing? 20
It is difficult to cover the complexity of the investments sector 20
Training of the partner bank's sales staff can be very time-consuming 21
What can support growth of insourcing relationships? 21
Making use of existing relationships 21
Developing other geographies 22
New product and service opportunities 22
Deterioration of the financial markets 22
Key considerations for insourcing services 22
IT system infrastructure must be appropriate 23
Potential insourcing business must have demonstrable a USP 23
There must be a potential client base of willing outsourcers 23
There must be board level commitment to launch an insourcing business 24
Once the agreement is in place, communication and knowledge flow are critical 24
CHAPTER 2 KEY PROVIDERS 25
Bank Vontobel: the allrounder 25
Co-operation management is part of Asset Management & Investment Funds 25
More insourcing co-operations are to follow 26
Co-operation with the Raiffeisenbanken is Vontobel's model case 26
The Raiffeisen Group uses the Vontobel brand 27
Vontobel develops products and services that are suited to the Raiffeisen clientele 27
Vontobel's support of distribution and marketing plays a central role 27
Vontobel has entered a new strategic partnership with T-Systems 28
VONSYS - Vontobel Solutions for Your Sourcing 28
Wealth Team View 29
Credit Suisse: Expert to Expert Banking 30
Credit Suisse is one of the Top 10 financial services companies by assets under management 30
Credit Suisse restructured its interbank services in 2005 30
Expert to Expert Banking has become part of a dedicated Financial Institutions department 30
Expert to Expert Banking combines expertise from asset management to trade finance 31
Trust plays a very important role 32
Some areas of Expert to Expert banking have a domestic focus 32
Credit Suisse can use independent private banks within the Group to test-drive services 32
Wealth Team View 33
Maerki Baumann & Co. AG: indepedence is key 33
Banking services are going independent 33
Transaction banking will become an independent entity: InCore Bank AG 33
MBC has developed Legando, its proprietary IT platform 34
Only a few partner banks take the full outsourcing approach 37
Zuger Kantonalbank uses the most comprehensive service 37
Pricing does not increase with the number of transactions 38
Insourcing can add most value through administrative services 38
MBC's insourcing services had a difficult start 38
MBC sees its independence as a key differentiator 39
MBC is looking across the frontiers 39
Wealth Team View 39
UBS: The Bank for Banks 40
UBS is currently the world's largest asset manager 40
The Bank for Banks service includes an extensive range of services 40
UBS's differentiator is the front end 42
UBS is looking into new markets and product areas 42
Wealth Team View 43
Wegelin & Co.: not to be sneezed at 43
Small but powerful 43
Insourcing to gain economies of scale 44
Different types of co-operations exist 44
Special case: Bank Linth 44
Business Process Outsourcing 45
SPtailormade 45
A less favorable investment climate could force smaller banks to rethink their strategy 46
Efficient data management is a challenge 47
Wealth Team View 47
APPENDIX 49
Definitions 49
Insourcing 49
Kantonalbank 49
Research methodology 49
Further published research 49
Global Wealth Management SPP 49
Interactive Databases 49
Market Reports 50
Strategic Insight Reports 50
Wealth Management Competitor Tracker 51
Datamonitor Asia Pacific Wealth Management SPP 51
SPP writing team 52
List of Tables
Table 1: Bank Vontobel AG: Key figures, 2004-5 25
Table 2: Credit Suisse: consolidated key figures, 2004-5 30
Table 3: Maerki Baumann & Co. AG: Key figures, 2004-5 33
Table 4: UBS Group: Key figures, 2004-5 40
List of Figures
Figure 1: Positioning of key insourcing providers, 2006 11
Figure 2: Pros and cons for both sides 17
Figure 3: Key challenges for insourcing services 21
Figure 4: The VONSYS business model, 2006 29
Figure 5: Expert to Expert Banking: Products and services, 2006 31
Figure 6: Legando: connectivity and integration, 2006 35
Figure 7: Legando modules, 2006 36
Figure 8: UBS: The Bank for Banks services, 2006 41
Figure 9: The Bank for Banks: Private Banking services, 2006 42