Análisis de la comunicación: insights y soluciones desde PROA


Desde estrategias innovadoras hasta soluciones prácticas, nuestro objetivo es proporcionarte las herramientas y el entendimiento para superar cualquier obstáculo en el camino hacia el éxito en comunicación.

The Current Challenges of Private Banking and the Keys to Effective Business Communication

The private banking business in Spain continues to be an appealing niche for the financial sector. According to the consulting firm DBK, at the end of 2017 assets under client management with financial assets of at least 300,000 euros amounted to 450 billion euros. This grouping consists of almost 400,000 people, mostly residents of large urban centers of autonomous communities with higher levels of wealth per capita, commonly known as the «golden triangle» (Basque Country, Navarre, Cantabria, Valencian Community, Catalonia, Madrid).

Strong Investment in Resources

The majority of suppliers set 500,000 euros as the minimum threshold that allows them to provide a specialized offering in products, tools, equipment, relationship managers, and even offices, to their clients with a higher level of capital. The search for an efficient and profitable model is the cause of this limitation.

Private banking customers provide high margins both on and off the balance sheet in the income statement of their financial institutions. But they demand a personalized and very professional treatment, for their high level of financial culture and for the imperative need to trust in a contact person that in practice becomes the «director» of the strategy to be undertaken with their client’s capital to fulfill a host of particular objectives, such as the time horizon, risk profile, assets and preferred markets, inheritance, shareholding structure of the family group, tax optimization, profitability of their investments, among others…

This obliges relationship managers to demonstrate a high level of financial expertise and quality in their services, maintain awareness of regulatory changes, use advanced technology to manage all areas required by their client and coordinate specialized teams that provide the individualized solutions. Only in this way can a stable and long-term relationship with each client be strengthened.

This means that capturing and gaining the loyalty of a private banking client requires a large investment in resources for any financial operator. This is because it is essential to have a value proposition that is global, tailor-made, differentiated and independent, with the focus placed exclusively on the interests of the client.

Business Models

In Spain, the private banking business is still dominated by the large commercial banking brands. According to DBK, they manage 77% of the total assets in this segment of clients, compared to the 23% held by specialized operators. Universal banking has a great advantage over the rest: it can share resources in serving several customer segments, therefore lowering costs. What resources? Above all, those intended for corporate activities (HR, financial management, products on the balance sheet, technology …), and commercial activities (branch network, business growth objectives).

But this advantage can turn itself into a disadvantage. Because in practice, in universal banking, it is more difficult to build loyalty for the type of client that puts trust in personalized services with a partner, since they value less aspects of the service such as digitization, achieving profitability for their investments, among others.

The greatest attraction universal banking has for this type of client is the strength and solvency of the brand, garnering trust for an institution that due to its size and strength of its balance sheet is conceivably not in danger of decapitalization.

Private independent banking, however, can a priori better meet the demands of an exclusive service and quality, although this requires making heavy investments in resources to materialize. Even more so in the current regulatory environment, which after the entry into force of Mifid II, reduces the prospects of income generation and increases costs.

The Effect of Mifid II

The objective of the European directive Mifid II’s implementation is to strengthen the investor and client protections of financial products and services. The regulation covers many areas of activity: product governance, listing and defining the services that can be provided -management, advising, information, marketing, execution-, customer reporting, advanced training of suppliers, transparency in costs, monitoring processes and optimizing investments …

The impact on the private banking business is, therefore, enormous. To the point that the sector considers Mifid II as an opportunity to reorganize business models, since it must adapt most of its activities (and with it, the predicted of costs and revenues) to this new way of working.

At this point, we can see the dilemma between independent advising, for which the client pays a recurring fee and can access the whole universe of marketable financial assets with the recommendations of his/her advisor, as opposed to dependent advising, where the advisor recommends assets to the investor and charges fees from the manufacturer for those that his client has purchased within a limited universe of products (provided that requirements are met in terms of transparency in revenues and costs, and quality of service),

Technology is fulfilling its role as a tool to expedite the implementation of Mifid II requirements, achieving the greatest possible cost savings. It is even allowing private banking models to supported by automated management and / or advising to emerge, aimed at larger quantities of capital, without the help of relationship managers in order to reduce expenses.

The Role of Specialized Communication

However, any business model in private banking must rely on a personal relationship between the client and his/her manager, so that  the objectives of efficiency/profitability and growth are achieved. These are challenges that only with customers with 100% loyalty and with all the financial and equity needs satisfied by their service provider, can be achieved.

The role of specialized financial communication is key to helping each operator optimize its regulatory adaptation and business growth strategies. It certainly helps to position each brand with its strengths, whether its structure is that of a universal bank with specialized teams and areas, or whether it operates on exclusive and independent private banking models, or even other non-banking models. The secret of success in building loyalty is to provide a global service tailored to each client, which can be achieved so long as the differentiating strengths of its service provider’s brand are perceived.

Private banking is a service that manages the integral relationship of the client with his/her financial service provider: the needs of advising and management for his/her capital, the needs of fiscal optimization, the needs of transactionality and financing needs. Communication becomes, therefore, a tool that transmits the differentiating value chosen by each private banking provider, and the key to its success within the strategy of customer loyalty and business growth.


Javier Ferrer
Director of Financial Communication at Proa Comunicación



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