In this blogpost we provide you with a 30-second summary of the second conference day of the Private Banking Summit 2007 in Zurich, as we already did in yesterday’s post on the the first day of the event.

Here some of the top take-aways of the second conference day chaired by Prof Bernard Dumas:

• The sustainability of the aggressive drive for global growth of many small and medium-sized private banking players was questioned by some speakers, such as Mr Wenger of McKinsey. He referred to the massive investments necessary and to the possible impact of a market downturn that would derail these growth plans. In the same train of thought there was a strong debate on the relevance of developing an on-shore business outside of one’s home base, which was seen as far to costly, for example by Ray Soudah of MillenniumAssociates.
• Mr Fraser of UBS Global Asset Management reminded us of the illusion of economies of scale and that people are and will stay far more important in this business than organizational aspects. He pointed out that economies of scale might be possible in support areas, but are less relevant in products and extremely low in distribution.
• A very interesting take-away of the day was the utilization of entrepreneurship & ownership as organizational tools used by some large banking players to boost performance and attract and retain high value employees in their large banks. Mr Fraser referred to their boutique-like structures in product development at UBS Global Asset Management, while Ms Fischer of EFG Bank explained how their Client Relationship Officers run their own P&L for their private banking operations within the bank (which is probably situated on the extreme end of “in-house” entrepreneurship).
• An intriguing dichotomy in the private banking business illustrated by several speakers was the tension between the need for stability, long term relationships and continuous innovation. Mr Brodtmann of Berenberg Bank outlined the art of building long term relationships, while Mr Frisch of Horizon21 demonstrated product innovation and Mr Bienz of Bank Frey explained the need for incremental innovation in processes and business models.
• An ongoing debate is the one on client segmentation. Ms. Fischer of EFG Bank explained that their Client Relationship Officers have absolutely no segmentation rules to follow (not even asset level entry thresholds), while Mr Perissinotto of Intesa Sanpaolo Private Bank in Italy outlined how each region in their country is extremely specific.
• Finally, the people issue remained an important topic during the second conference day. For example, Mr Meares of HSBC Private Bank showed in a quick calculation how much time investment is needed to the hire the 1′400 people they currently require and how costly that becomes. Mr Fraser of UBS emphasized that “structure follows people” and not the other way around and that a business “only works if we have the right people in the right roles”.

Popularity: 30% [?]