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Private Banking 2.0

Since the emergence of online banking there has been a fundamental assertion from high-net-worth bankers that their clients aren't digitally focused, they don't use social media or mobile banking, and that they prefer to pick up the phone and engage their banker because the nature of their interactions is defined by their wealth - they want the highest-level of service that only comes from engagement through a personal banker. 

Is this business immune to disruption, despite the rest of the retail bank being in an extremely disruptive state? It's apparent that Private Banks are now seeing customers move more frequently to multi-bank relationships because the basic digital hygiene factors within the Private Bank are not taken care of. For a Private Bank to claim that they are the best of the best, but to be amongst the worst digitally is contradictory.  So the depth of the relationship and scale of AuM (Assets under Management) are suffering because of lack of web, mobile and social capability, and Private Bankers are seeing a fragmentation of service offerings as a result of service perceptions.

If we look at High-Net-Worth-Individuals (HNWI), the facts are that they are extremely service conscious and generally loath inefficiencies. Entrepreneurs and successful business people in the HNWI category were the first to get Blackberry's, the first to get wireless broadband modems so they could work on their laptop in the limo from the airport to the office or sitting in the Maybach running around town, amongst the first to get the cool new iPad or the latest gadget. So right now, clients of private banks are asking - why can I login and do this day-to-day stuff through HSBC, Barclays or BofA, but I can't through my Private Bank? 

So where does technology fit, and can it provide real value? Is there a way that technology can deepen relationships with clients, or does it mean that relationships are less sticky because they are doing more interactions with the brand electronically?

The digital relationship

Recently a well known ex F1 driver and commentator was spotted on Twitter asking his Private Bank, Coutts of London, whether they had a local branch in Miami. The Coutts team respond within just a few minutes of seeing that enquiry come past the Twitter account and letting the F1 driver know that his Banker would be on the phone to him in a jiffy. Such a response is not the norm.

When presented with this sort of scenario, many Private Bankers scratch their heads and ask why a distinguished client like an ex-F1 champion would use Twitter to talk to his Private Banker instead of a simple phone call? That's not the point - you can choose to approach every single client and ask them why on earth they would want to use Twitter, or you can simply understand that an emerging channel like Twitter needs support. 

As the next generation of Private Banking clients start to take over from their parents, the last thing you want is to be identified as that stodgy, old, out-of-date bank that my father used.

Maximizing the client interaction

Perhaps the biggest revolution is in the primary face-to-face asset allocation meeting with the client. Over time we have gradually increased complexity as a result of KYC and risk, for what used to be a simple chat between a client and his banker. Now we load up our client with forms, risk profile questionnaires, with brochures, technical data, etc. that doesn't actually enhance the relationship - it just complicates it.

Soon we'll be asking the client to do the risk profiling stuff at home online and we'll verify this with the client face-to-face. We won't ask the client to fill out the same compliance information on a paper form that we've already asked for 20 times before, because we'll execute electronically using the data we already have stored. 

When we sit with them in a planning session, we'll use tablet based tools that allows us to show our clients what-if scenarios and adjusted asset allocations that work better for them, then we'll give them a selection of product decisions which they can learn more about at home online or execute electronically from behind the login. Why?

The real revolution here is in simplicity of the interaction. By maximizing time with our client for discussing their needs, and shifting other activities to supporting channels, we improve service levels. Even the humble monthly statement will be digitized with interactive components explaining market movements, the client's net position and short-term investment opportunities.

Social Scoring

In respect to client acquisition, the world of transparency through social media will increasingly start to impact banks in the coming 2-3 years. Brands and private bankers will be anonymously scored online as to their effectiveness. Just like dating services, social networks will be able to match bank's relationship managers with clients based on their expertise, location, and their ranking amongst peers. 

When we search for Private Banks on Google or YouTube, what results will we see? We won't any longer see the most popular brands, but the most respected brands amongst our peer group based on your social score. Unless you have a strong connection digitally with your clients, your social score is going to hurt you on the acquisition side of the business. After all, Private Banking is first and foremost about trust in your advisor - if my friends don't trust and recommend you, how can I trust you?


Once thought immune to the changes in multi-channel engagement, it turns out that perhaps the most important clients in the retail banking marketplace need to be highly connected, to provide the required service levels. For most private banks, this is an epiphany and hence, we’re seeing aggressive investment in this space today.

If you want to be the trusted advisor – it is clear you need to be connected and recommended. Engagement is no longer limited to a phone or face-to-face, the private banker must extend his reach to clients at every opportunity. A deeper relationship, depends on context and connection – not just a brand and asset management capability.

Private clients make great digital prospects

Comments: (5)

Zennon Kapron
Zennon Kapron - Kapronasia - Shanghai 07 April, 2011, 04:41Be the first to give this comment the thumbs up 0 likes

Brett, good insight. One area that we're seeing growth here in China on is online-banking solutions for wealth management. It seems that some NHWI have gone from not trusting anyone to manage their money, skipped the RM and gone straight online!

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 April, 2011, 16:09Be the first to give this comment the thumbs up 0 likes

"... clients of private banks are asking - why can I login and do this day-to-day stuff through HSBC, Barclays or BofA, but I can't through my Private Bank?".

One reason could be, the stakes in terms of bank balance, transaction value and other day-to-day activities are likely much higher in private banking, so strong security is of paramount importance. Improving security often comes at the cost of a drop in convenience, as we've seen in the case of regular retail banking. Although frictionless online interactions are as important in the case of regular retail banking, the potential cost to a bank of a busy high networth individual getting turned off by a website fraught with friction and exiting the banking relationship are far higher.

So, until the point where security no longer compromises convenience, bankers might tread more cautiously when it comes to implementing Private Banking 2.0.

Brett King
Brett King - Moven - New York 07 April, 2011, 16:48Be the first to give this comment the thumbs up 0 likes

Zennon - Yes, many HNWIs are very self-directed and once they can get an execution platform, feel they don't need an advisor anymore.

Ketharaman - Sorry, I don't buy this at all. Security is just not an issue in the way you are articulating it. It doesn't stop HNWIs from doing everyday banking, and sure the balances are higher, but HNWIs still want access to their portfolio for review and execution. This is a massive driver and is far stronger as an influencer than security concerns.

I'm sorry the data just doesn't support your assertion - in fact, exactly the opposite. Research strongly suggests that Private banking clients see the perceived lack of access as an issue where they don't have sufficient control of their money/portfolio and this is a much higher risk for them than the industry's internal perceived issue of security tied up with the use of the platform. The security argument is FI propoganda and not a real concern for customers any more.

Nicholas Hacking
Nicholas Hacking - ERI Bancaire SA - Geneva 07 April, 2011, 18:48Be the first to give this comment the thumbs up 0 likes

Private Banking is primarily about clients, and I think that the response to the issue raised also depends very much on the client profile. The elderly sheikh is not going to sit down with a PC or an iPad to look at his accounts and portfolio. He will summon the Private Banker to his palace. The entrepreneur on the other hand will want extensive digital access through multiple channels. The client who lives in certain countries of the world may not have internet access available of sufficient quality, or be afraid that using it he will be traced. He will want to physically review the portfolio with his Private Banker in a location which does not alert the suspicions of certain people or governments. The core system, and the channels which the bank make available (everything from meetings to digitally-based channels) need to be of sufficient variety to meet the different requirements of the different clilents (and keep up with them as those requirements change over time).

Brett King
Brett King - Moven - New York 15 April, 2011, 16:59Be the first to give this comment the thumbs up 0 likes


You're talking about a rapidly shrinking demographic. Meanwhile the 2nd and 3rd generation clients are looking at the banks of their father and saying "This bank doesn't understand how to work with me..."


Brett King

Brett King

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