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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

The Next Evolution in Banking

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The Next Evolution in Banking 1

By Young Pham, Chief Strategy Officer at CI&T

Everything we know about banking is about to change. A new industry around the sharing of financial data is primed to give birth to a host of new consumer services, all thanks to Application Programming Interface (API) technology. Already known for being the safest place for money, there are opportunities for banks to expand that relationship to other aspects of the customer relationship. Banks will no longer simply be just a place to deposit and withdraw your cash, but a one-stop-shop for a range of data-sensitive services.

The passing of GDPR and the Payment Services Directive (PSD2) were the first steps in this process of banks modernising how they handled their customer data. However, incumbent institutions have so far not engaged enthusiastically. Rather, it was only after growing pressure from fintech challengers and government regulation that they were forced to open up and share their data. This should not be treated as a regulatory challenge, but rather a way to grasp the unique opportunities that banks have to reposition themselves as the most trusted resource for their customers.

Expanding offerings

It is hard to overestimate the breadth of possibilities arising from open banking, should banks choose to take advantage of this evolution. While the public rarely holds bankers in high regard, it still puts a high level of trust in banking institutions. People are more willing to hand over their sensitive data than they would be to almost any other private entity. Furthermore, banks have a unique perspective into their customers’ behaviours, needs and desires. Spending habits, income streams and risk appetites are just a few examples of the data that no other institution can tap in to.

There is certainly appetite to expand offerings. In our recent study of business banking customers, over 68% of respondents indicated that they were open to their financial institution providing digital non-banking services.  This includes services such as tax support, managing payroll, or invoicing to help them with their day-to-day businesses.

More banks should consider how open banking can maximise their digital capabilities and create a greater range of services for customers to enjoy. Such offerings could be tailored according to each bank and their particular customer audience. For instance, banks could offer everyday services for most users, such as insurance for individuals or business management tools for business accounts. Alternatively, banks could offer more exclusive and specialised services for high net worth individuals to meet their specific needs, such as art appraisal and investment management.

The idea that a firm can expand its offering into new verticals is hardly new. Many of the world’s largest tech companies, such as Apple and Amazon, already offer diverse products including hardware, software, entertainment and cloud services. They are able to do this thanks to the vast quantities of data they have gathered, which provide invaluable insights into consumer behaviour and demand. Banks are in prime position to follow the example of these top tier tech companies thanks to their monopoly on key financial data.

Disruptors vs incumbents

The business model described above is already being adopted by numerous challenger banks. These firms have led the innovative charge thus far, thanks largely to their agility afforded by their smaller size. Indeed, some fintech banks already provide a range of non-banking services to their customers. Revolut, for instance, offers users several types of travel insurance as well as access to airport lounges as part of its premium service for a monthly subscription.

These offerings are not a sign that the challenger banks are about to topple the large incumbents. Rather, these disruptors have always flagged the gaps in the market that larger institutions have been too slow to fill. It is now up to the established banks to learn from their example.

While challenger banks may have a first-mover advantage for these services, the incumbents have two key advantages: capital and credibility. Firstly, the top banks have enough cash to fund this overhaul of their business models. While the challengers have been able to afford to do so in recent years, they lack the reserves to tide them over during economic downturns such as the current pandemic.

Secondly, even though challenger banks are perceived as more convenient and are less vilified than traditional banks, the public still trusts the latter. Many of these large banks can point to their extended histories and long-term investment success – accolades young challengers simply cannot match. In short, people don’t have to like their bank to trust them with their cash and their data. These two advantages strongly suggest that large banks are better positioned to take advantage of the open banking business model in the long term, despite being slower to adopt and adapt.

What’s next?

All this opportunity is within reach. We already have the technical capabilities for data sharing, and the regulatory framework is not insurmountable. Rather, the key for this evolution of the sector lies in banks’ appetite for risk and willingness to reinvent their business model.

Banks need to take a leap of faith and leave behind the business paradigm to which they’ve become accustomed. They should embrace transparency, run towards regulation and take advantage of opportunities to invest in these areas or collaborate with outside technology firms. Only then will banks be able to make the most of their data assets, creating value for the customer and further strengthening the relationship.

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Banking

Banks talk a good game, but are bankrupt when it comes to change and innovation

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Banks talk a good game, but are bankrupt when it comes to change and innovation 2

By Erich Gerber, SVP EMEA & APJ, TIBCO Software

You hear all the time about the incredible pace of change in technology and the way that it affects business, but sometimes we kid ourselves about the real speed of that change and the depth of its effects. Retail banking is a perfect example to illustrate the yawning chasm between the illusion and the less attractive reality. In this article, I want to provide a critique of the banking sector and its failure to change fundamentally and to modernise.

Banking is an old sector: the Banca Monte dei Paschi di Siena has its roots in the 15th century and the oldest UK banks go back to the 17th century. We often talk about legacy holding companies back, restricting their speed of operations and hampering their ability to adapt. Well, established banks have legacy in spades.

They also have cultural challenges. The old saying has it that something is “safe as the Bank of England” and that is a standard for security. But today we need banks to be more dynamic and represent something more than being a deposit box for our wealth. Consumers are accustomed to the superb customer experiences in entertainment (Spotify), devices (Apple), retail (Amazon), travel (Uber) and much else. Surveys show that they want their banks to be responsive, easy to use and available across multiple channels. They’d like banks to be secure but also to be advisors, enable flexible movement of assets between accounts, provide useful data analytics, be cloud- and mobile-friendly and offer deals that are specifically targeted at their interests.

S-l-o-w progress

At their core, banks now must become digital enterprises but, frankly, it has been slow going. As Deloitte observed: “While many banks are experimenting with digital, most have yet to make consistent, sustained and bold moves toward thorough, technology-enabled transformation.”

Erich Gerber

Erich Gerber

We all know that retail banking has changed significantly: you can see that in the proliferation of apps and the fact that, in pre-pandemic times, the morning and evening commute are peak times for transactions as people arrange their finances while sitting in trains, buses and subways. Banking has become a virtual, often mobile business, thanks to new tech-literate consumers pushing banks in that direction. But my fear is that the banks aren’t moving even nearly fast enough and that’s bad for us as consumers and bad for the banks themselves.

Banks are under pressure to change because challengers don’t have the legacy constraints of incumbents and because PSD2 and open banking regulations are having the intended effect of promoting banking as a service, delivering transparency and greater competition.

Attend any business technology conference and banks will talk about their digital transformations and customer experience breakthroughs, but it’s my contention that a lot of this work is more window-dressing than platform building. Or, to put it another way, banks are injecting Botox, rather than undergoing the open-heart surgery that they really need. It’s a case of ‘look: fluffy kittens and shiny baubles’ in the form of apps and websites, but the underlying platforms remain old and creaking and that means that the banking incumbents are hampered.

To be fair, I have lots of sympathy here. They simply can’t move as fast as the challenger banks that have had the luxury of starting their infrastructure from scratch and sooner or later that will come back and bite them. Look, for example, at cloud platforms where only 10 or 20 percent of infrastructure has been migrated despite promises of cloud-first strategies and the banking data centres where monolithic on-prem hardware still reigns.

You feel that slowness of action in your interactions with banks that communicate only via issued statements, letters notifying you of changes to Ts and Cs, and threats when you go into the red. Inertia is nothing new in banking either: we like to think that technology change happens in the blink of an eye but in banking contactless NFC took the best part of 20 years to go mainstream.

This is the dirty secret of banks. They see the need to change but remain shackled. Why are the banks so slow? Historically, because it was hard for competitors to gain banking licences and the capital to really challenge so there was no catalyst or mandate for change. Also, because change is tough and fear of downtime or a security compromise to critical systems is very real. More recently, because internal wars in organisations set roundheads against cavaliers, the risk-averse against the bold, resulting in impasse and frustration.

I said change is tough and that’s why banks need to power through on the basis of Winston Churchill’s wisdom that ‘if you’re going through hell, keep going.” How? By a combination of maniacal focus on expunging legacy systems, placing maximum emphasis on superb customer interaction experiences and digitally enabling anything that moves.

Right now, the banks are surviving, not thriving; they’re rabbits blinking into the headlights of approaching traffic, frozen in the moment. But they need to disrupt themselves before others do it to them: change is painful but not as painful as the alternative. They have to do much more or they will see a decline in their fortunes due to their bankrupt capacity for innovation and their inflexible infrastructures.

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Banking

Vietnamese National Citizen Bank Rises to Excellence with Three Global Financial Awards

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Hanoi, Vietnam – Global Banking & Finance Review is proud to announce the sweeping victory of National Citizen Bank in the 2020 Global Banking & Finance Awards®. The bank was recently presented with three prestigious global financial awards: Best Place to Work Vietnam 2020, Fastest Growing Retail Bank Vietnam 2020, and Best Investor Relations Bank Vietnam 2020. The Global Banking & Finance Awards® recognize the innovation, enterprise, method, progressive and influential transformations that transpire every year within the global finance community. National Citizen Bank would like to extend their thanks and appreciation to the community and their customers for their continuous loyalty and support throughout the last 25 years.

Vietnamese National Citizen Bank Rises to Excellence with Three Global Financial Awards 3

 

The National Citizen Bank was recognized for its all-inclusive professional working environment and ongoing staff development that enhances its internal communications and employee relations. Throughout the last 25 years, National Citizen Bank has focused on the core fundamentals of regulatory modifications with the underlying goal of dividing the volume of both business and administrative tasks. As a result of this, the bank has successfully strengthened its staff’s capacity to obtain, manage outstanding liabilities, and acquire assets to negotiate and retrieve capital efficiently and reliably.

When asked what allowed the bank to triumph against the fierce competition, Wanda Rich, Editor for Global Banking & Finance vocalized, “one of the key factors that stood out to the committee is that National Citizen Bank strives to maintain and maximize profit to shareholders through the implementation of stable, sustainable business operations and advanced production methods. The bank has also remained stable, positive, and had a high growth rate in all of its activities, which is not often seen; however, it clearly indicates how prestigious and overall accomplished they are. They should be exceptionally proud of all three awards.”

About National Citizen Bank

The National Citizen Bank was initially established as a rural bank in 1995 under the name Bank of Kien River. The bank optimized its competitive standing within the global financial industry, later transforming into an urban banking institution where they reinstated their name as the National Citizens Bank. With a team of highly professional financial experts and customer service representatives, the bank embraces each customer’s diverse needs to ensure customary, efficient, and trustworthy experiences from start to finish. Over the years, the bank has prided itself on its continued emphasis on risk management and global business relations with investors, customers, and partners. For more information, please visit the National Citizen Bank.

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