How can a private bank differentiate itself from competitors? Thomas Piske, CEO LGT Private Banking, has a clear view in terms of the importance of the quality of relationships and integrity in private banking.
Thomas Piske, bank clients are increasingly better-informed and banking products and services are in principle interchangeable. In this context, how can a private bank differentiate itself from competitors?
A bank’s products and services, but also its knowledge and expertise, are without a doubt important. As you correctly noted, however, these factors are ultimately interchangeable in a number of areas. In addition to this comes the fact that the traditional value proposition has lost credibility.
For example, during the financial crisis, many investment products didn’t deliver what they promised. Considering the events that have occurred in recent years, it is understandable that bank clients have developed a healthy skepticism vis-à-vis providers and their promises.
«Compensation is naturally one important factor for our employees»
My belief is that against this backdrop, a bank must ultimately differentiate itself from other banks above all through its values and the quality of its relationships with clients.
In going with this idea, your new advertising campaign talks about values: «Values worth sharing» is the slogan. What exactly do you mean by that?
«Sharing values» means two things to us. On the one hand, we want to create long-term added value for our clients, our employees and society. On the other hand, we also want to be a company that these groups can identify with because they share the same values. But «sharing values» doesn’t mean that we just define these values ourselves and then, in a manner of speaking, preach them from the pulpit.
Instead, we engage in a dialogue with our clients, employees and partners. In our campaign, these groups talk about the values that are important to them in life and in a relationship. The points that are mentioned repeatedly in this context are mutual respect, honesty, trust, a sense of responsibility and integrity.
At the end of the day, are bank employees and bank clients not just interested in getting the biggest possible bonus or the highest possible return?
Compensation is naturally one important factor for our employees. But they know that long-term relationships with satisfied clients are a significantly more sustainable business modelboth for the bank and for themselves than a short-term optimization of returns at the expense of their clients. That is why relationship managers who are focused on short-term revenue optimization are not a fit with our culture and are therefore also unlikely to want to work for us.
«There is a young woman from Hong Kong who speaks for many of our clients»
And yes, investment returns are an important criterion for client satisfaction. At the same time, however, many wealthy individuals are interested in more than just money. They know that they are privileged and therefore don’t just want to preserve or grow their wealth.
They want to put it to good use and give back to society. In the campaign, there is a young woman from Hong Kong who speaks for many of our clients: she explains why and how she is using her wealth to make the world a better place. This is also important to our owner, the Princely Family of Liechtenstein.
Can you provide some concrete examples?
LGT has been committed to sustainable social development for years, in particular also as an intermediary between investors and companies and countries that are seeking capital. We began applying corresponding guidelines for our investments early on, and for example use our strong position in the private equity space to make our products more sustainable. We recently became the first financial institution in Switzerland to introduce a sustainability rating for investment instruments.
«For me the Hanseatic term «the honorable merchant» expresses this very well»
This provides private investors with a clear reference for how they can optimize the environmental and social footprint of their investments. One area that is particularly important to us is impact investing; we invest in organizations that take an entrepreneurial approach to make an active contribution to resolving social or environmental problems. Our clients can participate in all of these commitments.
So ultimately, the common values and interests that we share with our clients come down to not only investment performance, but also the nature of investments.
Earlier you mentioned respect, reliability and integrity as values that are important for your clients and employees. How would you define the values that are important from LGT’s perspective?
Exactly the same, actually. For me the Hanseatic term «the honorable merchant», which has fallen somewhat into disuse, expresses this very well. The honorable merchant does not, of course, work altruistically, but maintaining his good reputation and the respect and trust of his business partners come before making a profit.
«In his business relationships, he does not primarily see opportunities for advancing his own interests»
He is therefore not looking for quick, questionable deals that come at the expense of others, but thinks long term because he still wants to be in business tomorrow. In his business relationships, he does not primarily see opportunities for advancing his own interests, but rather a way of achieving something together with clients, employees and partners and creating added value.
According to this way of thinking, wealth and returns are not an end in themselves, and the concept of the strong supporting the weak is part of a company’s social responsibility. In my view, it is precisely these characteristics and conduct that typically constitute the strengths of family-owned companies such as LGT.
Austrian-born Thomas Piske studied business administration at the University of Innsbruck and joined LGT Bank in Vaduz in 1986, where he first worked as a financial analyst and investment consultant. During the 1990s, he held several management positions in Private Banking and in 1998, became Head Private Clients and a member of the Executive Board. He has been CEO LGT Private Banking and Chairman of all LGT private banks globally since 2009. From 2002 until 2012, Piske also served as Chairman and Vice Chairman of the Liechtenstein Bankers Association.
