Private Banking means personalised financial and banking services to the high net worth individuals (HNWI). Usually, HNW individuals are usually those who own a business, acquire more wealth as a result of it and therefore require the expertise of wealth management services with access to alternative investments. As such, private banks act as mediators and offer their assistance to such individuals regarding their investments.
Private Banking services include exclusive investment-related advice, protecting and growing assets in the present, providing specialised financing solutions, planning retirement and passing wealth on to future generations.
Benefits of Private Banking:
1) Privacy: The services offered by private banks remain highly confidential between the institution and the consumer. Their approach is providing exclusive services to their customers so that the competitors don’t lure a potential client with a similar solution.
2) Customized services: Prominent banks make sure that the HNWI clients receive personalised services tailored as per their assets held. An account or relationship manager is assigned to each customer who allows the customer to access mid-level upper management directly. This easy access minimises any obstacles for providing inputs regarding wealth management decisions, and the bank can strategise the decisions according to the client’s financial decisions.
3) Incentives:
HNWI act as main clientele for banks, solely because of the substantial assets they bring to the institution. They are often rewarded with special private banking services like tax preparation and planning, traveller's checks, or corporate checking at discounted rates.
4) High returns:
Most of the HNWI clientele receive higher returns from their investments that outperform the market.
Challenges:
1) Regulatory restrictions:
Regulations in India are not adequately equipped to deal with the kind of products and services that private banks sell. Few investments are not regulated by an authority making it difficult for the investors to redress their grievances.
2) Lack of Infrastructure:
Lack of appropriate IT infrastructure is one of the significant challenges facing the private banking sector in India. Bank branches are not well equipped to cater to HNWIs who require such high-profile services. Wealth management services currently in use are basic and are used more as instruments for generating reports rather than for financial planning.
3) Lack of expertise:
Private banking needs financial analysts who build strong, lasting and trust-worthy relationships with HNWIs following any financial crisis. There is a shortage of experienced and trained private bankers. Hence, recruiting, training and retaining highly qualified professionals is a high priority for most banks. Private banking services targets retaining the customers, when it should be focusing on training the right individuls for the job.
Private Banking in India:
According to an article published in April’18 by a popular daily, ICICI Bank, HDFC Bank and Axis Bank are India’s top private banks in which the majority of investments are undertaken by foreign investors even though management control is with Indians.
Private Banking services include exclusive investment-related advice, protecting and growing assets in the present, providing specialised financing solutions, planning retirement and passing wealth on to future generations.
Benefits of Private Banking:
1) Privacy: The services offered by private banks remain highly confidential between the institution and the consumer. Their approach is providing exclusive services to their customers so that the competitors don’t lure a potential client with a similar solution.
2) Customized services: Prominent banks make sure that the HNWI clients receive personalised services tailored as per their assets held. An account or relationship manager is assigned to each customer who allows the customer to access mid-level upper management directly. This easy access minimises any obstacles for providing inputs regarding wealth management decisions, and the bank can strategise the decisions according to the client’s financial decisions.
3) Incentives:
HNWI act as main clientele for banks, solely because of the substantial assets they bring to the institution. They are often rewarded with special private banking services like tax preparation and planning, traveller's checks, or corporate checking at discounted rates.
4) High returns:
Most of the HNWI clientele receive higher returns from their investments that outperform the market.
Challenges:
1) Regulatory restrictions:
Regulations in India are not adequately equipped to deal with the kind of products and services that private banks sell. Few investments are not regulated by an authority making it difficult for the investors to redress their grievances.
2) Lack of Infrastructure:
Lack of appropriate IT infrastructure is one of the significant challenges facing the private banking sector in India. Bank branches are not well equipped to cater to HNWIs who require such high-profile services. Wealth management services currently in use are basic and are used more as instruments for generating reports rather than for financial planning.
3) Lack of expertise:
Private banking needs financial analysts who build strong, lasting and trust-worthy relationships with HNWIs following any financial crisis. There is a shortage of experienced and trained private bankers. Hence, recruiting, training and retaining highly qualified professionals is a high priority for most banks. Private banking services targets retaining the customers, when it should be focusing on training the right individuls for the job.
Private Banking in India:
According to an article published in April’18 by a popular daily, ICICI Bank, HDFC Bank and Axis Bank are India’s top private banks in which the majority of investments are undertaken by foreign investors even though management control is with Indians.
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