Fineco wants to increase private banking revenues and exploits artificial intelligence
Credit. The institution exploits artificial intelligence, albeit gradually. Priority for organic expansion. The risk of new technological competition
class="dinomecognome_R21"> Vittorio Carlini
6' min read
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On the one hand, the aim is to increase private banking revenues, thus also helping to push the consulting business forward. On the other hand, through the use of artificial intelligence, to continue along the path of operational efficiency. These are among the priorities of Finecobank, whose top management the Letter to the Saver heard from, in support of the business.
Social Object
.Yes, the business. The institution divides the integrated business model into three areas. Firstly Banking (58% of revenues at the end of 2023). This represents the 'traditional' world - albeit underpinned by the group's technological approach - of banking: from current accounts to the payment and issuing of debit cards to the provision of mortgages, overdrafts and personal loans. Then there is Brokerage (15%). That is: the financial intermediation activity, under which - among other things - the institution's internalisation is included. Finally: Investing (27%). In other words: the offering - together with advice - of a range of asset management products and asset management.
Private banking
.Well, precisely with regard to Investing Fineco has a priority. That, precisely, of pushing into the world of private banking. The effort on this front - not as of today - is clearly visible when analysing the trend in customer segmentation in relation to total financial assets. The share of those with more than half a million in wealth (private segment) represented 37% of total financial assets (Tfa) in 2018. It then gradually increased, reaching 46% of Tfa last year and settling at 47% in the first quarter of 2024. The goal? To continue to increase the incidence of these customers who, again as at 31/3/2024, on the one hand have a low (10%) share in deposits (of their assets) and, on the other, have a 50% share of assets under management (AuM). Which for Fineco, which obviously relies on management and advisory fees, is a positive aspect.
The competition
.All as easy as drinking a glass of water, then? The reality is more complicated. The saver points out that private banking is a bit of an Eldorado for many financial institutions in Italy. Put differently: competition is very strong and this creates limits to expansion in the sector. Fineco, inviting a more nuanced analysis, disagrees. The institution recalls that, growing more than the reference industry, it has gained market share over the years. Its market share - is the indication - was worth 2.9% in 2016 and reached 4.7% last year. This is a dynamic - Fineco always says - which, on the one hand, demonstrates its capacity for expansion; and on the other, is a consequence (also) of a diversified and quality offer in relation to the cost of the service. Not only. The group points out that a generational change is taking place in Italy, with the consequent passing on of assets. A context - Fineco concludes - that facilitates the world of private banking and, therefore, the institution itself.
But it is not only a matter of private banking. Remaining within Investing, the group is betting (also to develop the same private) on Fineco Asset Management (Fam). Over the past year, the ratio of Fam retail to the institution's stock of assets under management has risen. The ratio rose from 32.2% (March 2023) to 35.1% at the end of April. The company aims - while maintaining an open product architecture approach - at increasing interaction between the collective management company (and product factory) and the advisory network in order to intercept customers' needs (and thus increase their number). This is a strategy which, among other things, must contribute to the growth of the Investing world. In this sense Fineco confirms, for the whole of 2024, its estimate of revenue growth in the division in question at a low double-digit percentage (10-15%).
