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Contribution Details

Type Master Thesis
Scope Discipline-based scholarship
Title Private Banking Industry and Implications of Changing Investor Behavior
Organization Unit
  • Ankit Doshi
  • Jean-Charles Rochet
  • English
Institution University of Zurich
Faculty Faculty of Business, Economics and Informatics
Date September 2016
Abstract Text The private banking industry is facing numerous challenges pertaining to low interest rate environment, shrinking margins, waves of regulatory measures, and digitalization. But, none ofthese will determine the future course of action as strongly as the changing investor behavior. This master's thesis contributes to the ongoing research in academia and industry on identifying the most important dimensions of investor behavior change and their implications for the industry. The aim of this thesis is to identify the changes and the differences in investors' behavior using the concept of source of wealth. To achieve this objective, an industry survey was done from wealth managers of some of the big private banks. The purpose of the survey was to obtain detailed information on investor behavior considering factors such as risk appetite, exposure, time horizon, and complexity across asset classes. To incorporate the concept of source of wealth, the wealth managers were asked questions for the four most common client categories - corporate executives, first generation entrepreneurs, inheritors, and retired individuals. The results of the study clearly indicate that across most of the investor dimensions considered, there is an observable behavioral difference demonstrated by the investment decisions. The granular analysis further established that the degree of such change can vary from one case to another. One important result of the study is that retired individuals are showing an overall tendency to decrease their risk appetite, whereas first generation entrepreneurs are probably the most demanding and risk seeking clients for the . banks. Overall, it appears that the source of wealth plays a key role in clients' investment decisions. The survey study also gave important strategic implications in the areas of digitalization, regulations, and others.
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