Wealth of GCC high net worth individuals set to grow to $3.8 trillion by 2012 despite tougher markets (page 2 of 2)

Over half of the growth in the HNWI market has come from entrepreneurs, and this segment requires adjustments in the types of products and services offered. Private bankers will have to increase the cooperation between business units within their organisation, offering a more tailored service and investing in building relationships with the client. This is particularly relevant for the Middle East, where the majority of wealth is of entrepreneurial origin.

- Corporate structure - Many private banks and wealth managers operate under one roof with investment banking units. While synergies do exist in this business model, Oliver Wyman has found that they are often hard to come by in practice. More importantly, this set-up can expose private banks to significant reputational risk, as shown by recent market turmoil and write-downs.

- Risk management systems - As businesses become more complex, private banks need to take a fresh look at risk management. Current risk management strategies in banking are heavily geared towards solvency and liquidity-related issues. However, in private banking, the latter are often less significant than non-financial and reputational risks (e.g. data security, fraud etc.). These risks may not threaten the existence of a private bank, but they do endanger the franchise and might irrevocably destroy shareholder value.

- Brand - Private banks operate as much in the luxury market as in banking. Brand is instrumental in attracting and retaining the "right" clients. Wealth managers therefore need to create a suitable message that can be conveyed via brand imagery as a key component in maintaining and growing the value of the business. "Private banks need to manage their brands to differentiate themselves in this increasingly competitive marketplace," said David Hensley, senior partner at Lippincott, part of the Oliver Wyman Group.