Banking, over the past couple of decades has become delocalised and depersonalised. In the modern era, the average big bank offers an average service, although for the vast majority of banking customers this is good enough. Most of us are perfectly content to operate our bank accounts at arms length, to very rarely visit a branch and to never need to speak to the bank manager. This latter point is just as well as many no longer work in branches any more.
The large banking institutions handle the banking requirements of all but a small percentage of the population and the average customer has little need for physical interaction with their bank. Similarly they have modest banking needs that are easily catered for by these goliaths of the financial world.
However, for those that fall outside the scope of the homogenised banking services, what can they do?
Today, there is nothing short of a plethora of financial institutions ranging from the enormous High Street banks through to small firms where you can sign up for a more personal level of service. Be it a premier level of service, or a private one, concierge or family office, there are a multitude of firms, each attempting to differentiate their respective services to customers.
A comparison between some of these services often shows glaring contradictions between rival organisations where, on occasion, a premier banking service actually appears to offer more than a private banking service. Popular belief says private trumps premier - generally - but that’s not always the case.
Above all, these deluxe or luxury offerings do offer an enhanced level of service above the normal retail-queue-up-at-the-counter experience. And this is where choice is important. Clients need to be clear if this is really for them and if so, how much are they prepared to pay for it.
So what of small banking institutions? It is the small independent banks that are ideally placed to capitalise on the current feelings of negativity towards the larger banks. However, there are very few truly independent small banks in the UK. Many of the household names in private and premier banking, the likes of Coutts, Adam & Co, Cater Allen, are in fact owned by some of the largest banks in the country, if not the world. While small private banks offer very similar products and services to their larger peers it is on personal service, relationship and tailoring where they come to the fore – arguably these are the true unique selling points of the small private bank. These USPs are fiercely guarded by having carefully considered criteria for accepting a new client. The criteria ranges enormously between firms but typically the mid-range private banks will look for an individual to have at least £1 million in investable assets and perhaps an income in excess of £250,000 per annum. Although these figures are often viewed flexibly, the true private bank must make sure it doesn’t let too many clients through the door otherwise relationship managers/private bankers become swamped with unprofitable relationships and ultimately fail to deliver the quality of service to those aspirational clients it has tried so hard to attract.
Clearly developing and maintaining a close relationship with a client is considerably easier at a small private bank. Building the relationship in the first place is a two-way street and clients must be prepared to engage in the process. This means that the first cost that both clients and the banks must be prepared for, is time. A potential customer of a High Street bank may wander into a branch one day and open a new account, perhaps put some money on deposit and maybe enquire about a mortgage all at the same time. It is more likely a potential private banking client will meet a relationship manager on one day, come back or be visited by that manager on another day, introduce his other advisers over another meeting or lunch and only then open a bank account. All this time and through this process, the relationship is building. Thereafter more time is expended by both parties in maintaining and developing that relationship and consequently, the service they both expect and receive.
While this seems like a lot of effort, the rewards for client and private bank alike can be substantial.
For the client, the benefits are a relationship that delivers attention to detail, a continuity of manager, good execution of instruction and a full product range that the private bank will provide itself or source from another provider. All of these benefits are designed to give the client the feeling they have joined an exclusive private members club and that they are truly valued.
For the bank, the chance to be that client’s trusted adviser and influence other aspects of the client’s financial affairs is at the core of relationship banking. Most will work with the client’s other advisers in a collaborative ‘client first, middle and last’ manner.
Finally, all private banks will offer direct access to a relationship manager as well as other named individuals. No more listening to hold music while the call centre tells you ‘how important your call is.’
