Analysis Of The Private Banking Business Development Strategy

Although private banking has existed for over hundred years, it's a brand-new thing to China. Following the reinforcement of Chinese economy and accumulation of wealth, the demand of private banking is increasing. On the 28th March 2007, the Bank of China set up the first private banking sector in China, which opened a new page in Chinese banking operation. Many foreign banks are keen on Chinese high net worth customers. In addition to fierce competition in domestic personal financial market, the strong operation abilities of foreign banks will reveal for less restrictions according to WTO agreements. The situation of BOC is rigorous. So the article discusses the strategy of developing private banking based on analysis of private banking and analysis of BOC's attributes.At first the paper gives an overview of private banking. Private Banking provides investment and wealth management service for the persons who have plenty of assets. The most-important characteristic of Private Banking is providing tailor-made finance service according to different requirement, what's more, the asset management capabilities is more powerful and the business scope is wider than personal VIP financing. Along with the accelerated accumulation of the private properties, the needs of extended capital management from the enormous group of magnates become more and more intensely. That makes the private banking become the engine power of driving bank internationalization and occupying the global peak industry of banking. In fact, the average profit margin before tax of global private bank is higher than that common retail banking can get. The paper in this part comprehensively studies customer sizes, types of product and service. Generally, the private banking products and services mainly include following five aspects: the first is making finance plan consists of cash flow, liabilities, tax, investment, insurance, retirement pension, real property and business durative development scheme. The second is asset management business which is used to customers maintain and add wealth mounts by individual portfolio investment; the third is trust and real estate business which can reduce real estate tax dispose the asset according to customer expectation; the fourth is custody business which support customer investment action by report, bookkeeping, trading settlement and other special services; the last is common banking service.Then, the paper studies the development state of overseas private banking including history retrospect and analyzes critical success of factors of Swiss private banking to obtain some material external and internal factors which are needed by development. Also it investigates the development trends of overseas private banking ,as(1) focusing on subdividing markets and profit analyzing, simultaneously emphasizing the relation value of customer; (2) implementing cost management; (3) enhancing producing efficiency and improving service qualities by standardizing and regenerating mechanism; (4)emphasizing profit measuring and report; (5) meeting customers needs by improving technology。Combine the 2 analysis aiming at proposing strategy to cope with the changing environment.The third chapter of the paper analyses the operation environment of BOC. Along with China economy rapidly developing, private finance asset mounts up and the scale become larger. According to statistics of Merrill Lynch and Cap Gemini report, the persons who hold assets values above 1,000,000$ adds up to 300,000 and all of them are potential customers of private banking. On account of the limitation of time schedule of China finance industry opening, overseas banks can't act as agents of insurance, securities trading and can't establish fund corporate, so they only provide common service .Especially the foreign exchange business become the point of occupying the high-level customer markets. In the face of the challenge of development of the private banking in western countries, Bank of China started to provide finance service for the magnates on March this year which was the first private banking sector so far. While in China the problems such as sorts of products and services, quality of personnel and technology level, consumers'vague recognitions about the service, disadvantage affects caused by macro-environment are outstanding, so the paper analyze external environment and internal environment of BOC and by contrasting analysis, the paper discuss the shortage of development of China private banking and the reasons why getting behind overseas private banking. Combination all analysis we get that BOC can adopt aggressive strategy tap its private banking services through strategic position and action evaluation matrix. The discussions of aggressive strategy realization in marketing, product research and development, working process reengineering, information system, personal and risk control are follows.At last the paper discusses some problems which should be given special attention in view of developing private banking in our country at present stage. Such as perfecting the related law, improving accounting and taxation framework, supervising, set up personal credit system and secrecy regulation, etc. These hygienically factors will give our private banking a luminous prospect.