Private banking in Asia, once hailed as the promised land, today is as tough a business as any other. Low margins, aggressive competitors and a failure to understand the needs of their customers make life hard for bankers.
Every third among rich Asians is unhappy about the performance of his bank of choice, according to a survey by EY consultants. The share of unhappy customers in Asia is comparatively high – in the U.S. for instance the same figure is 20 percent.
The unhappiness seems to stem from the delta between the banks' approach to customer care and expectations of the rich themselves, according to «The Experience Factor», the EY study.
Discrepancy Between Needs and Services
A majority of 57 percent of financial-services companies for instance believes that the relationship managers remains the most important channel of communication to the customers. But only 32 percent of customers actually share that view – all others, which is two out of three, prefers digital channels.
So which are the main factors influencing the choice of bank in Asia?
1. Transparency About Fees and Commissions
Banks need to be transparent about how they price their services. Customers in Asia tend to have accounts at more than one bank and thus are used to compare.
2. Reputation Matters
Asian clients chose their bank according to the reputation of the institute. A traditional family-owned bank such as Lombard Odier or a princely connection as with Liechtenstein's LGT can be of importance.
3. Transparency of Performance Reporting
Private-banking clients in Asia typically are entrepreneurs, people who know their numbers. This type of client wants to know exactly how his stakes are doing. The bank has to provide a modern and transparent accounting system and relationship managers need to be able to explain those numbers in detail.
4. Understanding the Needs
The financial needs and goals change over the lifecycle of people. At one point, an entrepreneur needs a credit, at another he may want to withdraw from his business and take out capital. And at a one point there comes the time when the entrepreneur passes on his business to somebody, perhaps his children, perhaps to a buyer. A relationship managers needs to remain flexible and show the required level of empathy for his client.
5. The Reputation of the Adviser
The relationship manager evidently has to have impeccable manners and a clean reputation. The Asian customer tends to put more emphasis on such aspects than on the level of competence of their bank managers, which may come as a surprise to European banks.
6. Objectivity
The private banker is employed by the bank and has to generate revenue. But he has to be careful not to view his customers as a cow to be milked. Asian customers know very well when a discussion with the relationship managers turns into a badly disguised sales pitch. It pays off to be objective and modest.
7. Investment Expertise
A relationship manager needs to be able to explain what he does with the assets of his client. This is part and parcel of modern-day private banking.
8. Client Confidentiality
Customers want to safeguard their assets. Building trust to customers who seek protection must enjoy highest priority of banks in our times of ever increasing transparency.
An Overview of the Important Aspects in Private Banking
