PRIVATE BANKING? NO LONGER AN ELITE SERVICE

AP Advisor Private | January 2021

We are currently witnessing a process of democratization of private banking. Although this might sound like a contradiction in terms, today the services once intended for a selected few are accessible to everybody. In fact, the digitalization of the procedures allowed for the industrial scalability of almost all services once intended for private banking. 

Seven years ago, a banker used to speak for hours about Lombard credits as something unique to his bank. After a few years, the same service is offered online by the most important multichannel bank in Italy. 

Another banker told me: “In private banking there is almost nothing that may not be scalable as long as it can be financially and commercially supported”.

Private banking, once considered a field for a selected few, has become today a field for everyone. So, what to do to maintain the purity of a service once intended for a small elite? And, most of all, what to do in order to stand out? 

Raising the quality level, focusing on unique services is the true antidote to homologation. To this aim, major private banks (that is, those who want to compete in the Series A championship) tend to bet on hiring the best financial professionals available.

Once recruited, private bankers are encouraged through attainable, yet challenging goals – for example, among the latest and most popular topics in the field is investing in real economy, that is investing in private equity, private debt and infrastructures.

These investments require financial professionals who are knowledgeable and, above all, able to find the right interlocutors. The keyword is, once again, training and competence. 

The number of training activities organized by private banks for their bankers has grown significantly last year. This was made possible by the large use of digital platforms (which have been permanently legitimized) and by the availability of time deriving from the significant reduction of business trips.

A survey conducted by FINER every year on a sample of over 1.700 private bankers (FINER® Private Banker Explorer) showed a rise in the level of satisfaction with both the training activities provided by the bank and with the career paths available. 

In addition, according to private bankers the process of ongoing innovation of the offer has become fundamental. This means new investment solutions, new protection solutions, but also the implementation of an all-round service of financial consultancy which includes property management, credit supply and even philanthropic initiatives. 

Entrepreneurs represent a good test bench for private bankers – they are quite demanding and enjoy working with several financial professionals, accountants, lawyers, notaries, etc. In fact, they are unable and unwilling to rely on one single manager.

A successful private banker should be able to navigate between these professional figures, enhancing and summarizing their skills in the interest of the entrepreneur. 

The ability to moderate different competences and instances is a talent that has to be built through targeted training: according to the surveys conducted by Finer over the last year, only the banks that increased the quality and quantity of training activities came out successful.

What is to be done to stand out? It is no coincidence that the industry of private banking and, in particular, the most advanced companies in the field have been looking towards the model of family offices. 

The model of family offices focuses primarily on the technical competences of their employees together with their high level of awareness on the services they offer.  

In short, the market of private banking is faced with two possibilities: on the one hand, aligning with the market and making procedures as efficient as possible, something that requires a considerable size and large economies of scale. On the other hand, trying to fly higher and raise the bar.

In both cases, financial professionals make all the difference. 

Nicola Ronchetti 

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