Relationship Management in Private Banking

The explosive growth in wealth throughout Asia adds to the fact that the region now accounts for one-in-five ultra high net worth individuals. It has fuelled a war for private banking talent across Asia. Competition for private bankers and clients in Asia's main financial capitals - Singapore and Hong Kong - will intensify as the number of private banks providing differentiated products and services increases.

In 2005, the rate of growth of the industry was 12-14% with some private banks reporting growth of 20-25%. This trend is expected to continue with the increase of individual's wealth. While poaching talent from competitors appears to be the priority for many private banks, the main game is still to offer the best service for one's clients. The ability of private bankers to develop long-term relationships with their clients will determine ultimately who can achieve succeed. Private banking clients look for relationships based on trust, a sound understanding of their investment needs and constraints, and an ability to link those needs to personal life goals within the constraints. With private banking products becoming increasingly commoditised, it is the relationship management abilities, not the technical know-how, which will differentiate high-performing private bankers from the mediocre. As competition intensifies, private bankers must be able to distinguish their offerings.

My personal experience in banking has shown that many private bankers are unable to answer the most important client question of all: 'Why should I hire you as my private banker out of the other thousand choices?' Banker training programmes that sharpen client relationship skills will lead to increased referrals from existing clients and greater share of wallet, while laying the foundation for 'trusted advisor' status. Poaching may help private banks achieve scale in the short-run, but only an investment in training and development (esp. in the area of relationship management) can ensure the company's long-term success.