The importance of brand in private banking

Jürg Zeltner CEO, UBS Wealth Management

Branding is important but it needs to constantly adapt if it is to remain relevant

A strong brand is a great starting point for a private bank when looking to attract new clients, but this is built up over time by demonstrating client focus, excellence and sustainable performance. There is a danger in standing still, or thinking you have reached your destination, as this is constantly evolving. Private banks need to work hard at maintaining their brand, creating an emotional connection to their company through brand activities that resonate with their clients. 

For example, at UBS, Formula 1 and contemporary art are the pillars of our global sponsorship, which sees our brand maintain a global presence around the year, while giving us platforms to entertain our global client base.

 There are areas that must be a given: capital strength, efficiency and effectiveness, and risk management, but it is the additional client focus that makes the difference. We must be there for our clients when they want, whether that is early in the morning or at the weekend. And the advice we give must be tailored for the specific client. The way the world operates today, everyone has access to real-time market data, but investors need an adviser with the expertise, experience and knowledge of their client to make the data meaningful. It is only when this is interpreted for specific clients that it becomes personal, and the clients are more likely to become advocates.

Key to achieving advocacy from clients is the ability to offer solutions that meet their most complex needs. One thing that most UHNW clients share is that they all contribute significant amounts of money to philanthropic endeavours. By helping others, they express values, build personal and family identities and make a lasting impact on society. At UBS, in addition to our own philanthropic activities, helping our clients with these deeply personal decisions, we are strengthening the differentiation of our brand, whilst encouraging social change.

If you look at the biggest challenges facing the financial services industry today, you might point to the massive increase in regulation and continuing challenge of rebuilding client trust, both consequences of the global financial crisis. We believe technology is going to be the biggest area to transform our industry, as it has so many others. Failure to adapt could render a strong brand impotent. 

There are two main reasons why it is so crucial to embrace the digital challenge: to meet the new wealth management requirements of clients created by the new digital world; and to successfully compete with digital rivals and use innovation to make us more efficient, secure long term business and most importantly enhance the client experience. 

We see the future of wealth management as a combination of high tech and high touch, as we help our clients successfully navigate through volatile markets and interpret the mass of available information.

Ciaran Whelan Global Head of Investec Private Banking

Brand is a consequence of several key elements, including an organisation’s reputation and an implied promise for the future. 

All aspects of organisational behaviour – products, client experiences, staff, the role of an organisation in society, even perceptions of a company – give an organisation a reputation. In private banking, this reputation, coupled with the ability to deliver, builds a good brand.

It comes down to three points: trust, expertise and likeability. Essentially, clients want to know they can trust you with their money; that you are equipped to make good choices and look after their interests, and at the end of the day, they will choose you or stay with you simply because they like you.

In today’s marketplace, brand has become increasingly important when it comes to acquisitions, over and above investment performance. When times are good, we found trust became less important. 

Before the crisis of 2008, clients and banks alike were riding the wave, increasing their risk and chasing the money. However, since then, we have found the clients we attract are more prudent, trusting and loyal to our brand, as we are to them.

Since the crisis, the global banking industry has endured negative perceptions. It has been difficult for financial institutions to rise above these and any scandal to one has been a discredit to all. The relationship between a bank and society is complex and one single entity will battle to right the wrongs of an industry under scrutiny. 

However, private banks have the opportunity to work their relationships on an individual basis – creating awareness, being open and taking responsibility for their actions. It takes a certain amount of economic maturity not to get pulled into a cycle of negativity. 

A bank must always be aware of its role in society and constantly revert to a sound moral compass that remains true to its clients, shareholders and staff. Money is not everything.

Brands are continuously evolving and vying for attention and private banks are not exempt. Since products are no longer necessarily the core differentiator, consumers are looking for ways in which their bank fits into their lives as seamlessly as possible. 

To stay relevant in today’s environment, customisation, immediacy and authenticity are key. To deliver our services to our clients, we will continue to invest in innovation and technology. 

But, these are just enablers. Once again, good branding is about developing trust in a marketplace. To do that you need the right people doing the right job. Core to any brand is the way business is done. You cannot copy the core behaviour of an organisation and the values that underpin it. 

Since the financial crisis, clients are more likely to be attracted by and remain loyal to a brand they feel is looking out for their interests

Shelby du Pasquier Partner, Head of Banking and Finance Group, Lenz & Staehelin

Clients need to be able to trust their private bankers, meaning brand is even more important in this industry than many others

While of essence for any service business, reputation is particularly critical for a private bank. The sizeable amounts involved, the bespoke services offered, as well as a close relationship, sometimes spanning generations, often result in the creation for the client of an important level of trust and confidence in the institution. 

In this respect, the position of a private banker is somewhat similar to the one of a trusted family lawyer or doctor. This element of trust is of paramount importance and often supplants a pure performance- or tariff-based assessment of services rendered. As a result, a scandal affecting the reputation of the institution or its morality is likely to result in loss of that trust and massive client disaffection.

Although the pre-eminence of this ‘soft’ factor may diminish in a world of transparency and automatic exchange of information, it will remain an important element in the wealth management business. 

The capacity for a private bank to retain staff and integrate them in the culture  of the institution, rather than rely on lateral hires to address recurrent turnover issues, will help maintain a climate of continuity and personal service conducive to an efficient wealth management business. This beats an arid and commoditised world where relationship
managers are replaced by centralised operators and compliance officers. 

Innovation and technology will also have a role to play. The ability for a private client to access financial information and interact with bankers in a secure and efficient electronic environment will be a key differentiating element.

The issue of reputation and brand similarly arises as regards global banks, whose other business lines are regularly affected by reputational issues. That said, clients serviced by the wealth management arm of an institution have learned to make the distinction between the ills affecting the private banking division, as opposed to the forex or investment banking arms. 

One could see this as the flipside of the benefits clients enjoy in a large institution, such as financial solidity and access to services not available in a pure wealth management business. This notwithstanding, the private banking client’s reaction is likely to be the same as in a dedicated private bank in case of problems affecting the wealth management unit and staff whom they are dealing with.

 Nowadays, banking groups seem to be facing an endless list of problems that over time carry increasing financial cost and reputational damage. This, to a large extent, is due to the stark increase of regulatory and judicial enforcement against financial institutions that followed the 2008 financial crisis. 

In this context, a distinction has to be made between the problems affecting the core of institutions and their operations (e.g sanction busting, Libor or forex rigging, insider trading) and those (mainly tax related issues) that are a side effect of the current transitioning of the wealth management business into a tax transparent and compliant world. 

Contrary to the first type of problems that may reveal serious governance and  organisational defects, problems arising for private banks as part of the international crackdown over tax evasion, should be temporary in nature and gradually disappear with the introduction of the automatic international exchange of information system.