Oliver Berger, Consultant at  Leathwaite.

I predict the next generation of financial services CEOs will have gained their track records as Chief Information Officers. Given the massive importance that technology has within modern banking, it is a credible suggestion that by 2020 we will see the first CEOs in banks who have spent the majority of their careers in IT.

The end of an era for the investment banking CEO?

2015 is a landmark year for financial services CEOs in Europe. The last decade has been dominated by CEOs stepping into the top position from an investment banking background but there are strong indications that this is about to change.

When we take a look at the leaders of large European financial institutions, it is clear that there has been little scope to hire outside of investment banking, until now. By way of examples, Oswald Grübel spent most of his career at Credit Suisse First Boston in London, Zurich and Singapore. After his time as CEO, he moved to UBS where he was then succeeded by Sergio Ermotti, who came from Unicredit’s investment banking business. At Credit Suisse, Grübel was succeeded by Brady Dougan, ex-CEO of Credit Suisse’s investment banking arm in the US. In the UK, Barclays’ former investment banker CEO, Bob Diamond, was succeeded by Antony Jenkins who built his career in retail banking – an exception for Western European banks. However, Barclays’ most recently announced leader, James “Jes” Staley, also spent his career in investment banking with JPMorgan. Stuart Gulliver at HSBC and Jean-Laurent Bonnafé, at BNP Paribas, again, both come from investment banking backgrounds. The list goes on.

As investment banking continues to be repositioned by universal banks in Europe on the basis of capital constraints and risk appetite, it is conceivable that we will see future CEOs with less background in this area in the future. With the growing uncertainty coming to a head, 2015 may well mark the end of the age of investment banking veteran CEOs in financial services.

Focusing on Wealth Management

As most banks have downsized their investment banking businesses, the focus has shifted to asset and wealth management on the basis of theoretically steadier, less risky returns-on-equity. We have already seen an upsurge of wealth businesses in APAC accompanied by new wealth created in the sub-Saharan African region. Moreover, as the wealth of people in Western Europe and the US continues to grow, every major bank is focusing a large part of its strategy on wealth management.

These trends are causing a wide-spread change in the business model of wealth management, as it moves from a personal relationship-based business, to one that is heavily influenced by digitalisation. While the personal relationship with customers will continue, wealth management will have to offer them ever more digitalised services. As a result, banks are increasingly beginning to resemble tech companies. IT now forms an umbrella over all functions as more and more services move online, and future CEOs working in wealth management must be intimately aware of the potential of technology.

The future of global financial institutions lies within digital private banking

 Asset & Wealth management are likely to be the most important business within a bank over the next couple of years; and we know that it will continue to move into the digital space. Digital private banking is therefore one of the most important topics in every bank’s current strategy. With this in mind, it is more than likely that the future CEO could have an asset/wealth management background in addition to a track record gained in IT and Digital.