Market Trends of United States Private Banking Industry
Rising Number of HNWIs Driving the Market
Private Banking is a team of professionals who deliver private banking and wealth management services to high-net-worth individuals and families, from banking and cash management to lending, investment strategies, and trust and wealth advisory services. Many large banks targeted private banking services because of the growing wealth of individuals and the relative profitability of private banking businesses. A high net-worth individual is at least USD 1 million in liquid financial assets, excluding personal assets such as a primary residence. Investors with less than USD 1 million but more than USD 100,000 liquid assets are considered sub-HNWIs. Very high-net-worth individuals include a net worth of at least USD 5 million, while ultra-high-net-worth individuals are worth at least USD 30 million.
The United States has experienced sustained economic growth over the years, leading to the accumulation of wealth among individuals and households. Strong economic fundamentals, technological innovation, and entrepreneurship contribute to the creation of wealth and the expansion of the HNWI segment. The performance of financial markets, including stocks, bonds, and real estate, has a significant impact on the wealth of HNWIs. Bull markets and favourable investment conditions can drive portfolio growth and increase the net worth of affluent individuals, leading to a larger population of HNWIs.
Digitization of Private Banking
Rapid technological developments, the expectations of digital customers, and the emergence of new competitors drove private banks to reconsider their business models and improve their internal processes.
The US financial institutions and banks are focusing on artificial intelligence or machine learning, blockchain, data analysis or big data, and Robo-advisory platforms. They are considered explosive and are intended to significantly change how they work, with a strong impact on the strategies of financial institutions and their governance. It is especially in the operational area, where they contribute great progress and greater efficiency with their processes which results in the growth of the private banking market share.
Technologies are being developed to handle the threats that are increasing with cybersecurity. Bank of America Corp was the top digitalization innovator in private banking and is followed by JPMorgan Chase & Cos.
