«Private banks may target a niche clientele»
Private banks have to choose between scale and niche. They may target a niche clientele who expects bespoke and value-added solutions that combine peace of mind through trusted long-term relationships rather than selling basic services at low price.
Societies have been evolving at a very fast pace, and the Private Banking environment is no exception. Today, we think the industry is at an inflection point. Banks need to really focus on strategy and transforming their business and operating models to increase their growth and efficiency.
In this fast-changing environment – largely affected by the Covid-19 crisis – it became vital to reassess and implement new strategies to adapt and react to the “new” normal. As an agile and flexible organisation, we have done an end-to-end assessment of our strategy, business organisation and operating model in order to bring forward practical ideas for improvement and create new opportunities.
On this new path, strategic focus on client segments seemed fundamental. We have diligently achieved it by exiting non-core client segments or via the scaling up in core markets through client portfolio acquisition models (both BtoC and BtoB).
We also improved our focus on our client servicing capabilities by reviewing the Front Office model and business processes with the aim of maximising client satisfaction and increase revenue potential.
Therefore, before the Covid-19 crisis, we were well prepared to face the challenges and continue to face them with serenity in these peculiar times. For our existing clientele first, but also for our new private and professional clients too. We are deeply convinced banks need to choose between scale and niche. In other words, banks may decide to sell basic services at low price and at scale to those clients who see Wealth Management as a commodity and do not value a more customised offering. In this segment, it is likely that new entrants, which do not build on IT legacy structures and rely on predominantly digital channels, will be able to grab a significant market share.
Alternatively, private banks may target a niche clientele who expects sophisticated services and values long-term relationships. In this context, one of the major questions to ask is whether we are prepared to truly provide value-added services tailored to our clients’ needs.
The answer must always be “Yes”. Our asserted choice has always been to act as a boutique bank and to commit ourselves to provide an exceptional client experience. Client loyalty is eroding in many businesses that are subject to commoditisation – and an excellent client experience is the only way to counter such trend. Our organisation is 100% designed to achieve this purpose.
One main point must also be kept in mind; the client profile has been evolving for a couple of years now. Luxembourg’s private banks are experiencing an outflow of affluent clients with assets below 1 million euros and, simultaneously, a strong inflow of (Ultra) High Net Worth individuals – mainly entrepreneurs or top-executives of listed firms – bringing in assets of more than 10 million euros. These clients appreciate the country’s political, social and legal stability. They also appreciate our European-integrated model with a large network of DTTs (Double Tax Treaties).
Private bankers have to adapt to these new types of clients. The time where older client generation in search of a secure environment to put money aside for difficult times is definitely over. The younger and entrepreneurial clients have different priorities – they want to access exclusive opportunities and spend their money within a wealth architecture tailored to their needs. Their investment scope is larger and driven by new considerations. They want private banks to be accessible and bring tailored solutions for their personal and professional financial needs. They are very knowledgeable and want to feel empowered and in total control of their assets and investments.
In that respect, at Banque Havilland, our entrepreneurial heritage helps us understand these types of clients – it is in our DNA. Our proximity with them is not really a matter of a bank’s geographical location, but also a matter of easy and fast accessibility to the bank’s services, wealth planning & structuring capabilities, and to all types of asset classes. As long as the clients’ assets are kept safe in a secure environment, this accessibility and advisory capabilities are the most crucial element to build trust in the long-term.
Head of Private Banking
( source: Paperjam )