In the current digital age, Germany’s Berenberg still prioritises the personal touch as a key feature of its services, according to bank’s global head of private banking, Dr Peter Raskin. Valentina Romeo and John Schaffer find out more
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The private banking business is unique in that a trust mechanism is integral to pleasing and retaining clients. Although digital services are becoming more significant, the traditional approach of older banks stills hold weight and importance amongst wealthy individuals and families.
Berenberg, the German bank headquartered in Hamburg, is the oldest private bank in existence, founded in 1590, and uses its heritage and experience to cater for HNWI and UHNWI customers who seek the preservation of wealth through generations.
The bank reported AUM of EUR 30.1bn($32bn) in 2013.
Digital channels have become ever more ubiquitous in the retail banking sector, with the huge popularity of mobile apps and the mass closure of branches. However, Berenberg maintains that digital services are not a priority for its wealthy private banking clients, with phone calls being the preferred channel.
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By GlobalDataDr. Peter Raskin, MD at Berenberg, tells PBI: "In private banking, digital is not such an issue. Although Clients want to use digital to access their account, they don’t want to do anything further. They just want to see their portfolio."
Personal touch
Berenberg targets its clients on the basis of personal relationships. Private banking customers still see face to face contact as an integral part of the service.
Raskin, who has been responsible for Berenberg’s international private banking unit since 2009, says: "Most of our clients change from big banks because the regional managers change a lot. We have people on board for a long time." Established relationships are important to wealthy customers. According to Raskin, Berenberg’s clients trust the bank "more than their husbands or wives".
International operational strategy
According to Raskin, its international business is growing at a much faster rate than its German business. In Switzerland, Berenberg’s AUM grew by over 20% in 2014.
The London office reported similar levels of growth. Raskin believes that Bereberg’s experience in wealth management and focus on private banking sets it apart.
"UK banks are more focused on just buying and selling products. We are more in the UK as a family office. What we are doing is exactly what you call private banking. We specialise in it. There is no reason after all these years why we should change our attitude," he says.
Although Berenberg is a relatively small bank, Raskin believes that the bespoke nature of its services can yield an advantage, even in an international market place.
"What I realise is that private banking is getting more and more international. If you have a German client, he is not merely concerned with Germany. He could be sending his children to boarding school in London, for example. You have to be international as a bank and with the special size that we have, we are small enough to care."
Relationships-based business
Raskin says that although private banking has become progressively globalised, wealth management is still requires a close relationship with clients.
"International competitors need to be open minded, because you are dealing with people and not commodities. You need to listen to the client. You should not see them as a machine to generate as much income as possible. Private banking needs time, to get a client on board and gain their trust."
Berenberg’s international services are predominately centred around Europe. The bank wants to have a modest approach to the number of regions it is based in.
"We are focusing on Europe as we can have an active approach out of London easily because of the passporting system. We are
not keen on Eastern Europe as most clients from Eastern Europe don’t live there anymore. We don’t do India, have a small China approach, but more to check what’s going on."
Next Gen focus and growth plans
Provisions for the next generation of wealthy individuals and maintaining wealth is of paramount importance for private banks and its clients, as teaching children how to manage wealth can often be a challenge.
It is in the private banks’ interests to involve the children of HNWIs and UHNWIs as they are likely to be future customers.
Raskin says: "We train clients to pass on the wealth, but not all at once. We organise seminars for the children. We can start talking to the client’s kids when they are eight years old, but it depends on the situation. When they are 16, we actively approach the client."
Raskin says Berenberg is careful about how to structure its next-gen offerings in order to avoid risk and be mindful of taxation.
Berenberg seeks modest growth, to retain the advantages that a smaller outfit can offer its customers. Raskin says: "We would like to keep the business manageable. We need a personal approach and growth is not everything."
Regulation is affecting the whole banking industry. The controversial HSBC scandal over money laundering at the bank’s Swiss
private banking subsidiary, is putting further scrutiny on the industry. According to Raskin, regulatory considerations have become integral in the bank’s business model. Raskin says, now, regulation is a concern for the CEO, as "you have to reorganise the business model".
"We always know what’s going on and we are one of the first to change," he says. Raskin adds that the core business model for Berenberg, however, "has not changed much".
