One-third of banks do not consider themselves successful in the mutual funds business - but none plans to withdraw from it, according to a study released by Deloitte & Touche L.L.P., New York.
In fact, more than three-quarters of banks intend to increase their investment in the mutual funds business.
The study, on the practices of 100 banks active in mutual funds, found banks successful in mutual funds maintain strong relationships with their money management units and seek growth through expanding the asset base of existing customers.
"While banks believe they enjoy a business advantage based on reputation, distribution and established customer base, clearly they have not captured a significant share of mutual fund assets," said Eric Thebner, a partner in the firm.
According to the survey, 29% of the banks have more than $10 billion in mutual fund assets; 61% have $1 billion to $10 billion; and 10% have assets of less than $1 billion. Fifty-three percent offer proprietary funds and 94% offer third-party funds.
Among successful banks, mutual fund sales were the most frequently cited measurement of success (89%) while only 24% of the unsuccessful banks cited sales.
The successful banks placed greater emphasis on sales than profitability, demonstrating their willingness to make the necessary investment to make the business grow.
Successful banks in mutual funds tend to offer proprietary funds (64% of successful vs. 29% of unsuccessful banks) and have total assets of more than $10 billion (33% of successful vs. 21% of unsuccessful banks).