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INTERVIEW: Accenture Examines How Private Banks Should Treat Client "Perks"
Chrissy Coleman
24 May 2013
Editor’s note: This publication recently
interviewed Sigrid Seibold, a managing director in Accenture’s financial services
industries sector. She has a wealth of experience across financial services domains
and has
been involved in projects across Western Europe, Asia, Turkey, White Russia and India. She
worked for two major banks before joining Accenture in 2006. Seibold recently
spoke at a WealthMatters conference in Hong Kong,
organised by the publisher of this website. Separately, she spoke to
this publication about how banks should or could treat “perks” towards
clients from a strategic point of view. (To view a similar article on this topic, click here.) Can private banks be strategic in the way they offer perks? We think any perks should
be part of the overall client strategy. Usually clients are assessed by banks
on a number of criteria such as current life-cycle stage, potentially to further
develop wealth of that client, percentage of overall share of wallet etc. The
key focus in private banking is creating a unique client experience, which is
determined by a number of factors. The interaction with the relationship
manager is not only based on transactions, rather than being a trusted advisor
in all wealth related aspects. To create trust relationship manager creates
various interactions to truly understand its client needs, that include
spending time with him outside the Private banks office space but rather in a
neutral or client environment. The various perks should be strategic to support
that objective and need to be used smartly as they increase the
cost-to-serve. Brand Value should be
communicated stringently through those perks (examples matching brand
perception and linked events): -
UBS: F1 night race and
advisory excellence conferences -
SocGen: French Film
festival -
BNPP: Sporting events
(Tennis) -
Boutique Swiss private
banks tend to focus on more cultural events (e.g.: Photography, art exhibitions
) It is also important to
create events where clients with similar interest/needs can meet each other
(e.g: an entrepreneur looking for capital to meet venture capitalist in
technology sector, clients that share passion of wine, etc.) Perks can help to
differentiate in a highly competitive market if used strategically and
authentic to the brand value. Do clients value the perks enough to spend large amount of money on
them? The individual decision
depends on the individual buying and decision making behaviours, the relation
between perks perceived as appreciation by the bank and tool/medium to be
perceived elevated compared to wealthy peers is another dimension to consider.
Here it really depends how well does a bank understand the individual client
decision making triggers and where and when to use the perks in order to influence
actual asset inflow. How can banks assess whether it is “worth it”? We believe that all direct/indirect costs should be linked to clients and full
P&L done to make sure that private banks know on which clients the invested
perks bring a return or might also consider changing ‘types’ of perks to
certain clients on which the return is not realised. Do you think this ‘softer’ side of private banking strengthens client –
relationship manager relationships? In what way? In that aspect in it
important to differentiate at what point in the emerging or maturing
relationship perks are used and how they are building up. It will be more and
more challenging to create exciting and surprising perks to re-create the
unique client experience. We believe that banks need to go new ways in using
behavioural analytics to understand how to individually create these experiences
to ensure a long-term client connection. Do these tactics work in
terms of winning new business or retaining/meeting the expectations of existing
clients? Can these exclusive events be harmful to the private banks’ other
clients in the way that only a select few are invited? What are the general pros and cons of a private bank investing resources
in these “extras” to impress clients? Final points?
Given that average Asian client has its assets spread across multiple private banks
he will be courted by various relationship managers and enjoys a variety of
perks. A trusted relationship is key and
the return expectation of the Asian wealth clients are extremely high compared
to European or North American Investors. So performance, price transparency and
trusted relationship will be key to determining how many assets a client moves
to a financial institution.
Banks evaluate their relationship managers performance on various factors such
as the increase of assets under management, return rations per asset class, net
new money etc. There is also the cost dimension – how much is the cost to serve
this client and compared to peer group and in relation to the return delivered.
Given the efficiency pressure the wealth management market is experiencing the
cost dimension can and will not be ignored by banks.
It definitely does as it
provides a unique way to connect with the client and understand him/herself
better as a person and the specific needs. It also creates a better link
through joint experiences outside the usual office environment. So playing Golf
and understanding what is on the clients mind but also the other way around for
the client to understand which value the relationship manager can truly bring
to his unique client situation is extremely valuable.
The return of
these perks can be clearly measured on a timely scale and the net new money
inflow. Recent surveys under clients in APAC have shown that not even 50 per
cent of all clients in the high net worth segment feel that their needs are
clearly understood and responded to. If that first step is not correctly done
the used perks will be not very targeted and the return mediocre at best.
Usually the events are very private and exclusive and there is also a clear
distinction between the various clients segments. We would think that as
usually in human behavior something, which is rare, seems to be more desirable.
In consequence any knowledge about the perks on the high net worth individual
client level would seem to be desirable for the affluent client close to the
move in the next segment.
A `Catch 22’ situation is that if you over spend on them, they will feel that
private banks are over-charging them for their services; if perks are a
strategic element of the overall client experience it makes absolute sense to
have experts in the field finding exactly the right triggers to respond for any
special interest the banks clients needs to have. But again client need
analysis is the key and usually the banks are not using the full potential to
get to know their client (changing) needs.
Transparency in pricing is key for wealth clients and here especially the first
generation entrepreneurial wealth, which in consequence means if the perks are
somewhat included in the fees (which they must if you look at full costs to
serve) then there may be clients who rather exclude the perks and pay for the
plain advisory service only (as they can organize their entertainment via other
sources or themselves). Given that on top of the Asian behavioural value chart
is status and recognition – any event that will demonstrate the very unique
individual value of the client will be perceived positively.