Do Private Banks Still Need Concierge Services
Clients making use of private banks concierge services can book the finest concert tickets and restaurant tables in town. But what goodies can banks expect from providing these luxury offerings, asks David Craik?
Last summer HSBC launched a global concierge service for its high-net-worth ‘Jade’ clients. In addition to offering personalised relationship management and wealth solutions the new offering promised to offer “hands-on service” from 600 lifestyle managers working around the globe.
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At the time HSBC said clients could utilise the service via their desktop computer, mobile or tablet to “get reservations at the most sought-after restaurants and hard-to-get tickets for sport music and arts”.
“With HSBC Jade we are bringing some of the features and services traditionally associated with private banks to a wider range of clients,” says Pablo Sanchez, HSBC’s regional head of retail banking and wealth management for North America.
The service is operated by Ten Lifestyle Group which runs similar concierge offerings for private banks in the Americas, Europe and increasingly the Far East including China.
Ten Lifestyle also run Coutts’ online concierge service which helps clients “secure bespoke discounts and money can’t buy red carpet experiences across travel, entertainment and dining at the click of a button”. Its other banking customers include Merrill Lynch in the US, Royal Bank of Canada, Scotiabank and China Merchants Bank.
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By GlobalData“The private banks provide our complimentary services under their brand and they tell friends and family that they booked this table or that ticket through Coutts or Jade. But they are managed and delivered by us,” explains Alex Cheatle, chief executive of Ten Lifestyle Group. “They use us mainly for dining and eating out in their home cities or when travelling. We guarantee access to the world’s top restaurants, organise tickets for sports and theatre, organise travel to get people upgrades and we help them buy things such as a bunch of flowers for their PA’s birthday or a luxury car.”
He says tastes and demands sometimes differ from culture to culture but there are many common areas of agreement.
“Our Chinese members are more likely to want us to source luxury handbags from Europe, but dining is big everywhere. Rich people are far more interested about where they eat out than they ever were 20 years ago,” he says.
In-house vs out-sourced
Cheatle says Ten is a market leader in private banking concierge along with other third-party operators in this space including Quintessentially and Bon Vivant.
Some banks prefer to directly manage concierge services such as BBVA Compass’ Global Wealth Client Program, which, among other perks, offers a free Christie’s arts and collectibles service.
“Private bank concierge services used to have a dodgy reputation in terms of quality of service,” says Accenture’s managing director, financial services, Daniel Kobler. “Now the operating model has changed and what used to be done directly by private banks is now being carried out via an eco-system-based approach using third parties.
“You need to first determine which client segment will be interested in these services. Who are the clients? Who wants more than help with their investments and [who] wants you to organise their private life? Maybe they don’t have a family office to do this role and see the private bank as a little bit like their personal assistant.”
Given this level of trust and engagement it is vital that the services are of high quality. “You have to do proper due diligence before you onboard a specialist provider because it is your brand associated with it,” says Kobler. “Part of this is ensuring that their cyber-security systems are of the same level as yours because they will be handling your client’s personal data.”
Cheatle adds: “If you have average quality service and a list of complaints then a private bank wants you nowhere near their client base. If something goes wrong, they will hear about it – a lot! But private banks doing this themselves is a real nightmare. They won’t be as good at it as a specialist because we have teams of experts. Our theatre experts, for example, know exactly where the best seat in any theatre for any show is.”
But does this level of detail really matter to private banks? What benefits do running quality concierge services bring to them?
Costs of concierge
“The first clear benefit is that banks see an increase in client acquisition. Take a business owner who has just sold up for £20million. They will be inundated by recommendations from lawyers, accountants and bankers about which private bank they should join,” says Cheatle.
“That business owner does not know which bank to choose because they all sound pretty similar. They all have a charming private banker telling you they are the best. Very often having a great concierge service will ensure that your bank gets its place on that potential customer’s shortlist.”
Existing users of concierge services also help customer acquisition through espousing the benefits to their friends, family and peers.
“When wealthy people talk to each other they don’t talk about how much money they have transferred or taken out of one account or another. In fact, they don’t normally talk about who they bank with at all,” Cheatle says. “But when asked how they managed to get tickets to an exclusive Jay-Z concert they will mention the private banking brand by name. Their companions are impressed and are intrigued about the service.”
Cheatle also notes improvements in customer retention.
“They don’t want to leave if they love their concierge service,” he says. “It’s never a great time to leave in January because we are busy sorting out your summer holiday and it’s never great to leave in June because we are organising your entertainment at Christmas. We become part of how you get things done in your life.”
Kobler says another benefit is enhanced customer service. “It doesn’t only strengthen the relationship between bank and client but can be used as an upsell strategy to generate extra income. It improves customer loyalty with a bank’s most important customers and figures suggest that a 1% increase in customer loyalty is equivalent to a 10% reduction in costs,” he states.
“As the economy becomes tighter and margin pressures focuses attention on reducing costs then customer retention becomes even more important. It is a revenue and cost gain and in the current climate the need for these services has become heightened.”
As such he says concierge can be profitable for private banks. “They need to manage the volume of the business properly. It is high margin; low volume and you need to ensure that there is an economic case behind it. But you can make money out of it if they are offered to clients through the right channel and are of the right quality.
Digital concierge
As more private banking services become digitalised and delivered through a platform or app, private banks need to think about the future of the concierge services they offer.
“Take the fresh money coming out from Asia Pacific,” continues Kobler. Those concierge services need to be fully digital because wealthy people there are very much into using electronic devices for areas such as trading.”
Cheatle also sees more future demand for digital options such as apps and emerging market growth. “Increasingly wealthy Chinese people are travelling abroad, and we can offer services when they do so,” he says. “We are also looking at more personalised services using customer and location data.”
As well as digital, education is key to the delivery of good concierge services. Ten is spending more time training private bankers in the services it offers. “If they know more about the service and recognise its value then they can have more engaged and richer conversations with their clients. They can help sort out getting a rare music gig ticket which will give the banker a halo effect!” Cheatle says.
“Concierge is no longer associated with just the credit card. It is now part of the whole wealth management and banking relationship.”
