Global Private Banking Awards 2019 - Analysis: US private banks in tune with client-centric world

The key standout from the Global Private Banking Awards for 2019 is the excellent performance of the US banks, with a new vigour, energy and vision apparent in their submissions and results.

Citi and JP Morgan have been particularly prominent in terms of numbers of trophies collected. Citi retained its Best Global Private Bank award, while also picking up accolades for customer service and work with global families. Its CEO of global private banking, Peter Charrington, was also named Best Leader. JP Morgan triumphed in the newer, “softer skills” of philanthropy, diversity and training. The likes of Northern Trust, BNY Mellon and Bank of America are also on the list of winners and highly commended private banks.

While strong balance sheets and the health of the domestic US economy has underpinned these banks’ success, there is also a more fundamental factor at play, that of becoming more attuned to develop a client-centric business, according to our judges.

“This requires a different management mindset and a commitment to rethink customer engagement,” says Seb Dovey, independent consultant and adviser to banks, who set up the Scorpio wealth think-tank. “Those that get this early – like some of the American firms – will reap much longer-term benefits. They will adjust their commercial model, they will increase their curation of data to make better commercial outcomes and they will embed a scalable model.”

It is this combination of technological innovation, customer service and business acumen which is finally clicking for the US banks, many of whom have learned the hard way, paying for defections after clients were dismayed at their product-pushing ways post-crisis.

Not only is the “can-do attitude” of the Americans beginning to take off, but their willingness to try out new ideas through measured risk-taking is beginning to outshine European rivals who are becoming more risk averse and thereby opening the door to US competition, believes Kim Cornwall, a former Merrill Lynch veteran now involved in training relationship managers, especially in Europe and the Middle East.

“The US banks do not have some of the hang-ups that the old school European banks have,” ventures Mr Cornwall. “They are happy to reach out to the younger generation and have launched many educational programmes which are well-received by clients both old and young. They have good training programmes for their bankers and stress the importance of inter-generational wealth transfers. JP Morgan leads the pack, though some of the big Swiss banks are also strongly focused on this.”

UBS, Credit Suisse and Pictet, for example, continue to have a strong presence among our winners and pick up awards for quality, with their services spanning several continents. While the European banks, particularly the Swiss, are making significant progress in their work to woo the next generation of clients, focusing on entrepreneurship, education and socially responsible sectors, among others, it is the US firms that have been the most vocal around these subject areas. 

This is particularly true with diversity, where the Americans have committed resources and adjusted their approach to business, whereas there appears to be little change to the attitudes of an older, traditionally white, male workforce of some players in Europe. 

Not only that, but some continental firms still take home country workforces with them when setting up foreign outposts, leading to an atmosphere closer to the colonisation of yesteryear rather than the modern day inclusivity they often preach.

JP Morgan’s aims and practices, for instance, include advancing black, Hispanic and Asian talent within the firm, commitments to hiring thousands of black students in apprenticeships over five years and empowering women. The bank’s setting up of 10 different Business Resource Groups representing constituencies including disabled workers, those from a military background, those from the next generation, LGBT employees and racial minorities is a stark reminder to many European players of their own challenges. Some European banks have fallen well behind the diversity trend and will begin to suffer as younger clients and relationship managers begin to seek firms which better represent their beliefs and mindsets.

US banks appear to have hit a richer vein of opportunity, due to their combination of management culture and quality of relationship managers, believes Gerard Aquilina, an adviser to family offices and former boss of international and domestic private banking at, among others, HSBC. “US domestic private bankers have a far more substantive knowledge of credit and other banking skills than international private bankers,” he says.

This organisational culture is further enhanced by influence from the top of the pyramid. “American middle and senior management is generally qualitatively better than the others. They have had to regroup since 2008, but are on the roll again,” he adds.

This appears particularly important when it comes to technological innovation, but also in the areas of socially responsible investments, training, diversity and philanthropy, which particularly light the fire of younger generations.

Leadership, and its role in transformation, is key to success. Global players such as Deutsche, Standard Chartered and HSBC have all faced major compliance and operational issues over recent years, after a period of strong, cross-border successes.

The question is whether they can return once more to winning ways through guidance from their upper echelons. “HSBC have an amazing global franchise and the size to succeed, they have just lacked the commitment,” believes Mr Cornwall. “There is now a good opportunity for HSBC and with vision and a change in attitude, they could go places.”

But the future is less certain for others caught in the revolving-door of a regularly changing management, leading to an almost permanent spot in the purgatory of constant restructuring.

Mr Cornwall has “seen the movie” of sporadic hiring without strategic vision many times, and warns banks not to pick up expensive staff without a strong central plan. “You cannot go out and buy AuM and RMs,” he says. “The best growth is always organic.”

A “fresh type of leadership” could eventually emerge at Asian players such as DBS and Standard Chartered which embraces the globalisation mindset and leads to a greater ambition outside their Apac perimeter fence. 

While most Chinese banks are still concentrating on business opportunities in their thriving home market, at least one is expected to burst onto the cross-border private banking stage within the next ten years.

“There is space for a global entity, or perhaps several entities, with strong, Asia-based roots and business platform,” suggests Mr Dovey. “So perhaps it is really a challenge for a fresh type of leadership that is open-minded enough to look beyond traditional borders.”