Private Banking Entering the Digital World

Have private banks been slow to adopt digital technologies and tools?

The answer is yes and across all banking verticals, these include both retail and business banking but private banks have been very slow.

I wouldn’t classify myself as a private banking customer, the one thing I do know is that this particular banking vertical is built fundamentally on relationships or to be more specific with a Relationship Manager (RMs).

Private banks do more than just offer investment advice, there are other services on top which mean that trust and privacy are paramount given the complexities of the services.

It’s also a big business area that has seen steady and strong growth and it continues to grow, esp. in regions such as South East Asia. The total number of net-worth client assets in Singapore for example is north of $3 trillion. The numbers are quite staggering, Hong Kong isn’t too far behind either with clients flocking from other regions around the world keeping a close eye of developments.

The old-fashioned client

The future of private banking is in question but the use of digital technologies is the big driver here, I know that technology will play a significant role in how customers will interact with their bank and vice versa. It’s fair to argue that some banks will continue with the existing model of RMs, old-fashioned approaches, manual driven, physical paperwork and the fact the client is dealing with a real person.

The digital and tech savvy client

The new generation of banking users are tech savvy and only have a preference that information be provided digitally, so this removes the need for physical paperwork, statements and the like.

However, what is key is the data that RMs can provide today and how that is analysed and interpreted to identify the best investments. Of course some banks are further ahead of others in terms of what they can offer, their product innovation etc. There is a balance that the private banking world needs to be mindful of and that is ensuring the digital onboarding and in-life experiences are delivered in the right way.

Time and time again I have seen apps and other digital services start off really well but later the client becomes more frustrated with how new features/services have changed the UX. This is equally important when balancing this with security and risk, you don’t want to be in a position where security and authentication start to take over things become ultra complex.

The digitisation of this sector is and will continue to happen, how banks can successfully manage data that they store on customers and translate that to something meaningful and tangible to their clients will derive success.

Digitisation matters

Is the perception from the private banking world that digital technologies don’t really matter and won’t affect them? I don’t know for certain but I assume that’s likely to be case.

Let’s not forget that even high-worth clients will be using digital services, they will likely have a smartphone as will their family members too. The competition to target these customers is also increasing. I know a number of large corporations who are looking to diversify away from their traditional financial services business and look at starting a virtual bank to compete for these wealthy, super-rich customers.

I believe the majority of these private banks are still on this journey of digital transformation, they’re moving IT budgets to look at optimising back-end systems, to build client-facing mobile applications and other services such other product innovations in this space.

The impact of digitisation 

There is always impact whenever the word digitisation is mentioned regardless of company and industry, the private banking world is no different. I mentioned earlier how crucial RMs were and to be honest with you, I don’t see their role changing so much. I do seem them become more digitally savvy and measured on how they’re able to deliver tangible insight and data to their clients.

Those RMs who embrace the changing landscape they work in and are able to adapt to what is required in the digital world will come out on top.

The most obvious impact will be felt from an operations perspective, however, this is true of all banking verticals and lines of business.