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How Private Banks can rethink their Brands to appeal to a New Generation of Investors

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How Private Banks can rethink their Brands to appeal to a New Generation of Investors

By John Clark, Planning Director at brand design agency Coley Porter Bell

The profile of the traditional private banking customer has changed dramatically. Whether it’s increased competition from fin-tech start-ups, or the rise of crypto currency, traditional institutions steeped in heritage are no longer automatically on the wish lists of young entrepreneurs and agile investors.Not only do private banks need to engage a whole new set of millennial customers, they need tore-evaluate their traditional approach to brand strategy and design to capture the imagination of the next generation.

John Clark

John Clark

Despite this, the more traditional values of stability, personal experience and judgement are still important and new, digital challengers will struggle to replicate these attributes. While research from Merryl Lynch on high net worth millennials shows there’s a need for guidance,(as few consider themselves knowledgeable about financial products and investments), it means banks and wealth managers will need to push beyond both the traditional clichés of wealth, and the misconceptions of millennial stereotypes. They will need to build brands with relevance and durability. With this in mind, we’ve identified six ways in which private banks could begin to think differently about building their brand.

Be easy to live with

Shaped by their experience with non-financial digital brands like Google and Amazon, on-the-move millennials expect to always be ‘always on’ and have control.  Brands need to fit into their life; not the other way around. For private banks, using new technologies could free the relationship from being purely face-to-face in an office setting; advice and interaction could be provided wherever, to whoever and however it is needed. For instance, taking a leaf out of Babylon’s book – the subscription health service provider – private banks might consider offering a service that allows video calls at any time of the day or night instead of face-to-face meetings. This means someone on a business trip abroad, can get the advice they need without waiting to get home. 

Work with me, not for me

At work and as managers, millennials tend to spend more time inspiring and empowering their colleagues than previous generations. This style of professional relationship is likely to extend to their expectations of their wealth manager. Indeed, when it comes to their investments, research from Deloitte found millennials want to remain in the driver’s seat: they want to understand and feel empowered to make investment decisions, fully understanding what is involved.In response, private banks may wish to shrug off their reputation as sages, and position themselves not just as partners, but as coaches or companions that are there to develop and grow with their customers.Again, taking inspiration from outside the category, in the world of beauty products, new skincare umbrella brand, Deciem, has achieved category-disrupting growth not by formulating the best creams, but by putting ingredient decisions into the hands of the consumers. With a portfolio of 200 products across 10 brands, Deciem taps into the millennial desire to both understand and be given permission to do what they think is right.

The wisdom of my peers

Millennials grew up immersed in online communities where the wisdom of the group, the ethic of crowd-sourcing, and a learn-it-yourself culture are valued. It’s not surprising the same behaviors can be seen when it comes to their finances. According to Deliotte, when making an investment decision, millennials are more likely to seek out and collate opinions and views from multiple sources. So, while private banks are there to provide expert advice, they shouldn’t expect millennials to take it at face value. Instead they can facilitate the conversation and provide platforms for investors to share their knowledge. UK based online investment service, Wealthify, is a good example: investors can create investment “circles” to share their investment experience and receive a discount on their annual management fee as they grow their owncircle. 

Do good and make money

When it comes to money, millennials don’t want it to compromise their personal values: they are less likely to measure their success in terms of wealth alone and they care about their personal impact on the world. For example, HSBC research with millennial entrepreneurs found they are motivated to go into business to both better themselves, and have a positive impact on their community.

This sense of purpose is likely to extend to their approach to investments, with millennials seeking out banks that share their personal values.Private banks will need to demonstrate that they can help clients grow their wealth, while having a positive and visible wider social impact. In the mass market, newer financial players are already building purpose into their business and brands. For example, US insurance provider, Lemonade, donates what’s left from annual unclaimed premiums to causes you care about, and Abundance Investments uses funds under management in projects and businesses take an active role in creating a better future.

Understand my personal goals

The long-term financial goals of millennials have shifted and may feel unfamiliar to private bankers. According to Merrill Edge, they are the first generation to plan for financial freedom or to afford to live a desired lifestyle, rather than the more traditional goals of say a comfortable retirement. They also don’t want to be treated as a homogeneous segment: they want advice that is unique to them and tailored to their life and aspirations.

To attract new millennial customers, banks will need to adapt their brand and communications to show they understand what their next generation of investors care about. The stuffy, clichéd visual language of wealth is unlikely to be appealing. With clients, private bankers will need the emotional intelligence to help balance what could well be the conflicting and confusing financial goals of a millennial investor. Technology can also play a role in helping clients not only understand but explore and feel the consequences of decisions. For example, MeetInvest has designed a fantasy football approach that allowed investors to select and build an investment team, and Merryl Lynch created an app that aged photos of their customers to help them build empathy for their future needs.

Old world values with new world relevance

There is a tendency for private banks to either focus on themselves – their heritage, expertise or track record – or the functional, more transactional side of their business in their branding. This is then reflected in a visual identity that uses traditional, stuffy imagery or has a clinical style that feels more‘big bank’ than ‘personal banker’. While it’s key to create meaningful changes in the brand experience, the visual identity also plays a big role in convincing the conscious and seducing the subconscious of both prospects and clients.

If millennials care about convenience, inspiration and openness when it comes to their investments, then these values should be visually expressed through every touchpoint: from the welcome letter, to the welcome desk, every interaction is an opportunity to express your point of view and create the seamless, modern branded experience that millennials expect. At the same time, it’s important for banks to stay authentic and build on their strengths and DNA while making them relevant to a new generation of investors. Lombard Odier is a great example of this. Having survived 40 financial crises and emerged stronger each time, Lombard’s brand is now built on a core idea of “capacity for reinvention”. In a fast-changing modern world, the brand now speaks to the banks’ ability and desire to constantly rethink to bring about financial stability.

Ultimately there is a need for private banks to balance innovating their experience and brand to reach new audiences, while reinforcing their reason for being. Private banks can draw on the learnings from brands that are already succeeding with millennials to help redefine their client relationships, while also restating their purpose as modern-day beacons of trust within the banking industry.

Banking

European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 1

By Sagarika Jaisinghani and Ambar Warrick

(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.

The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.

The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.

Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.

Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.

But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.

“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.

“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”

Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.

The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.

The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.

London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]

French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)

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Banking

ECB plans closer scrutiny of bank boards

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ECB plans closer scrutiny of bank boards 2

FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.

The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.

The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.

The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.

Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.

“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.

“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.

(Reporting by Balazs Koranyi, editing by Larry King)

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Banking

Where are we with Open Banking, and should we be going further?

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Where are we with Open Banking, and should we be going further? 3

By Mitchel Lenson, Non-Executive Chairman, Exizent

Open Banking has the power to revolutionise the way we manage our money, but most (65%) consumers are still not aware of it, while many financial institutions continue to treat it as an obligation rather than an opportunity.

For Open Banking to truly reach its potential, consumers need to have more trust in its benefits. However, this will only happen if banks and other financial institutions start to embrace it, rather than simply accept it.

Covid-19 has proven to banks that digital banking and open finance innovation is not simply a ‘nice to have’. It is vital for their own survival. With so many challenger banks now coming into the market, many of whom have entirely digital models and therefore invest heavily in technology, banks are starting to become aware that if they don’t embrace it, they’ll get left behind.

So, fuelled by a mixture of competition and Covid-19, banks are starting to realise that Open Banking is not about giving away valuable data, but it is about collaborating with third party fintechs to explore the endless opportunities data sharing can bring – to all sides.

By making open finance easier for developers, banks can not only save time and money by improving their own services but help create useful solutions that add real value for their customers.

Open Banking for all?

There is one, yet untapped area of consumer finance that could be immeasurably improved by Open Banking, and that is estate administration.

Mitchel Lenson

Mitchel Lenson

Recent research from Which? found that many executors contend with delays, errors and poor knowledge from their banks during the probate process. Our own research shows that most legal professionals admit the process does not work as it should, and the time it takes to complete probate is unacceptable.

Like the Which? survey, we found that the main issue is the administration involved, with most legal professionals saying that the time it takes for financial institutions to get back to them with the information they need is the main cause of delays.

Given that the system is not working for consumers, something clearly needs to be done. The good news is that the technology and data is already available – we just need to harness it to create a better system.

That is why we are developing the first ever platform to connect executors, legal professionals, and financial institutions to create a better, quicker, and more secure probate experience for everyone.

Our first release of the platform – a bespoke cloud-based solution to enable legal services firms to integrate directly with financial institutions making information gathering and processing more straightforward – was released in 2020. We are now building on that foundation to accelerate our development work with financial institutions to deliver additional value for all sides.

We also see huge potential in working with banks to utilise the digital financial infrastructure, powered by Open Banking, to improve things even further. But there is one, fairly sizeable issue – currently, Open Banking consent ceases at the point of death.

Is it time for legislative change?

Open Banking is not as open as is should be for those who can give consent, so we are certainly some way off from Open Banking for the deceased.  However, the more that banks acknowledge Open Banking and its potential and are prepared to collaborate with third party fintechs to develop better experiences for consumers, the more likely we are to get to a point where we can tap into that potential to improve things for the bereaved.

Many of the problems – highlighted by Which? – that consumers face when managing someone’s estate could be reduced significantly if open finance continued to apply to the deceased.

Open Banking provides a huge opportunity to speed-up and reduce friction for loved ones faced at some of the hardest moments of their lives, and there is a strong argument here for the current position to be reviewed to enable better access to a deceased person’s assets.

With our current platform, we are showing how technology is playing an incredibly significant role in dealing with the complex, tangled process that is probate and the potential of open finance in radically enhancing what we are already doing cannot be understated.

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