Private banking put to the test

AP Advisor Private | May 2020

Until a few years ago, the market of private banking used to be an island of happiness in the middle of a relatively calm sea: investments with guaranteed returns and low risk; prudential objectives of clients focused on maintaining the value of their assets; strong barriers to entry; importance of a high-end name; a closed, consolidated and exclusive system of relations. 

Today everything has changed: the digitalization of the means to access and use bank services; the entry of networks of financial advisors; the generational change among clients; the resetting of interest rates; the increased incidence of asset management and the consequent increase in the level of risk; the reduction of financial margins and the need to broaden the range of services available offering higher value-added services (inheritance, financial, insurance, lending and corporate services). 

Then, the lockdown toppled both the remaining competitive advantages and a service model in need of reconsidering some of its paradigms and of developing resilience. 

Private banking owes its success to the ongoing cultural and relational exchange between clients, private bankers and banks, bringing together complementary skills.  

The industry of private banking has always relied on relational dynamics between banks, people who work in them and clients. Private bankers, like many others, had to relinquish their usual rules of engagement in order to face the emergency, giving up several opportunities for personal exchange with clients.  

Therefore, it is of fundamental importance to analyze the flows of communication (frequency, modes, contents and level of satisfaction) among the stakeholders of private banking – financial professionals, banks and clients – during the lockdown, defining its repercussions on the future of private banking.  

For this reason, on 9 March FINER has activated a study aimed at monitoring the evolution of the communication between banks and private bankers and between private bankers and clients. 

The results of the first collection of data are quite surprising: first of all, the frequency of communication between private clients and bankers per week has doubled, increasing from 34% on 9 March (beginning of the lockdown) to 72% on 26 April.  

Moreover, the content of the communications between private bankers and clients appears to have changed as well. In March, communications focused on two main aspects: information on financial position (42%) and on the medical emergency (37%). In April, however, information on financial position (63%) takes precedence over information on the medical emergency (22%).  

In only four weeks, the means of communication between private bankers and their clients have rapidly changed – from phone (44%) and emails (30%) in the week of 9 March to video calling (47%) at the end of April.  

The level of satisfaction among clients with content and means of communication has increased from 49% to 61% in four weeks.  

The analysis of the frequency of communication between banker and management per week is equally insightful: first of all, frequency has increased from 54% to 78% in only four weeks; the content has shifted from information on the medical emergency (61%) and the management of clients (24%) at the beginning of the lockdown to themes pertaining to the views of the markets (31%) and the presentation of new investment solutions (19%) at the end of April.  

The most commonly employed means of communication between banks and private bankers have changed as well, from emails (61% on 9 March to 13% on 26 April) to web conferencing (15% on 9 March, 58% on 26 April).  

The level of satisfaction with the content of the communications between banks and private bankers has increased with the passing of time (from 54% to 63%). Web conferencing remains the preferred communication channel (59%), compared to company intranet (21%), WhatsApp (13%), phone (5%) and emails (2%). 

There is no doubt over the resilience and the exceptional ability to adapt shown by the industry of private banking during the lockdown, facing a veritable transformation with irreversible consequences.   

Therefore, it is legitimate to expect that the field of private banking will need to reimagine its rules of employment and its strategies of interaction and communication with clients and bankers. 

Historically speaking, the digitalization of the relationship between clients and bankers, and between bankers and banks has always been a viable option for private banking; today, it is absolutely essential.  

That several of the historical protagonists of private banking are not digital natives only makes this more challenging: the future is filled with opportunities and a new competitive scenario.  

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