The profitability of banking will develop in a very differentiated way globally, predicts Michael Bentlage. He has been with Hauck & Aufhäuser AG since 2009 and has been its CEO since 2017. He visited the zeb pop-up university, where the zeb team of around 1,000 people meets every year to discuss current topics and trends. Following the discussion with Michael Bentlage, we asked him three questions: about the economy and the future of banking as well as about success factors of integration processes.
The economies of important regions of the world are picking up again. Does this mean that the banking industry is also on the verge of an upswing?
If you zoom in on the major regions of the world, the picture for banks is very differentiated. Two regions stand out negatively: Europe and developped Asia, whose return on equity will probably remain unsatisfactory in the coming economic upswing. One of the main reasons for the stagnation is higher costs as a result of strong regulation. By contrast, the Chinese market for banks will develop positively. By 2030, this will be the largest asset management market in the world.
Secondly, there is the question of strategic orientation. What many experts have been calling for for a long time is a stronger emphasis on commission business. This is the path we have taken - initially with manageable success, and for some years now we have been steadily increasing commission income.
And an important driver is costs, or how to cut them. Size matters. Size enables significant scaling effects. Not least as a result of the transaction with Bankhaus Lampe, we will leverage further potential here. Basic costs - such as those for meeting regulatory requirements - will only be incurred once in the future.
One trend that is gaining momentum is that of sustainable investments, i.e. products that meet the ESG criteria of environmental, social and good corporate governance. Is this also a driver for more growth?
All banks will align themselves with ESG criteria - some earlier and more intensively, others later and not as comprehensively. In this respect, ESG will be more of a hygiene factor than a differentiation factor in competition. But this is certainly one of the megatrends for which we are also preparing. We have also identified a few others for ourselves:
We think that in ten years, banking will no longer be competitive without artificial intelligence. Distributed ledger technology - known as blockchain - will also have a major impact on banking. Processes will change, and so will products - think crypto or tokens, for example.
We will also see a high degree of personalization and individualization - generally among customers, but also in banking. An important segment and one that has been "underserviced" in recent years is the so-called she-enonomy; here at least lies the potential for strong growth. Last but not least, the term New Work is also one of the megatrends we are keeping an eye on. We will only be able to attract and retain top employees in the future if we offer them appropriate working conditions as well as development and training opportunities.
Subject to regulatory approval, you are about to integrate Bankhaus Lampe. What are the biggest challenges?
The long approval process is particularly challenging. This has been dragging on for over a year now. In addition, integrating the two cultures is a major task. Thirdly, the IT systems have to be merged. Here, zeb's expertise was very helpful. We noticed how well they understand the German banking market and also private banking.
It is particularly important in these processes to develop and communicate meaning, strategies and goals. You can ask anyone at the bank about our goals and you will always get the same formulations in response. And that's important, to have a common understanding of the goals and not everyone's own.