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Digital Transformation of Private Banking

Updated: Dec 6, 2023

Private banks have been rolling out the red carpet for the rich since the 19th century, offering their clients access to everything from premium financial products to exclusive concierge services.

However, these banks have done business the same way for centuries and will need to move with the times if they want to meet the needs of the digitally savvy and demanding Generation Z that will be their future clients.

Private banks target clients who are typically required to have a minimum of $1 million in liquid assets. The banks differentiate themselves from mainstream retail banks by offering their clients a highly personalized banking experience.

The top private banks in the world, according to Investopedia, include the global banks that have private banking offerings, namely Goldman Sachs, BNP Paribas, Citigroup, JP Morgan Chase, Credit Suisse, Bank of America, Morgan Stanley and UBS, and independent private banks and wealth managers, Raymond James and Julius Baer.

How does it work?

A private bank provides its high-net-worth individual clients with access to a personalized range of financial and investment services and products. Each client has a personal banker who manages all their financial requirements, from banking and investment management to trust and estate planning.

Clients benefit from discounted rates on loans and investments and gain access to specialized and customized financial advice; all put together seamlessly by their private banker behind the scenes.

Private banking for Gen Z

The clients of the future for private banks are undoubtedly Generation Z, who comprise a third of the world’s population, are expected to inherit tens of trillions of dollars, and, according to Barclays Private Bank, already have the indirect spending power of $1 trillion.

Generation Z includes those born after 1997 and are described by Investec Private Bank as the “world’s most socially-focused, technologically-advanced, influential, social media-obsessed generation.”

This generation has collective attributes that set them apart from any previous generation private banks have catered to. Apart from the fact that they haven’t had an experience of a world that didn’t put digital first, they have high ethics and moral values and thus prioritize authenticity over loyalty to institutions their parents have trusted and social action over wealth-creation as a means to a personal end.

Private banks will be pressed to satisfy certain Gen Z-specific needs, including access to a comprehensive, digitally enabled omnichannel range of financial services. Engaging seamlessly with a bank’s digital platforms will be critical, and Gen Z clients will demand client-centricity and flexibility.

To cater to their social consciousness and desire to make the world a better place, private banks will need to give them access to new-generation products like sustainability-focused products, such as Environmental Social and Governance (ESG) Funds.

Research also shows Gen Z clients like to budget and save more responsibly than previous generations and want to become financially educated so they understand why and where they should invest.

Private banking digitalization

For private banks, personalized services have always been more of a priority than providing products via digitalized platforms. However, the banking landscape is fast changing with the emergence of fintech and wealth tech disruptors that are responding proactively to changing customer expectations and satisfying regulatory requirements.

Traditionally private banks have offered their high-net-worth clients' digital access to their accounts where they can transact and monitor their savings and investments. Challenger banks are upping the game by offering far more innovative solutions, such as roboadvisors and digital wallet platforms, that can be customized for different clients.

Ever-stricter regulatory requirements have made the onboarding process of new clients tedious and time-consuming. By digitalizing the upfront and ongoing compliance documentation requirements, these processes will become far less onerous and more efficient for new clients, enhancing their first experience of what the private bank offers.

Many benefits for those private banks successfully leap into a digital-first future. By tapping into the potential offered by Machine Learning (ML), Natural Language Processing (NLP), and Artificial Intelligence (AI), banks can lower their costs, scale their offerings, increase efficiency and turnaround times, innovate, and improve customer experience.

Private banks that manage to scale up their services using digitalization while continuing to offer clients access to personalized premium services are those that will come out ahead in the decades to come.

Software platforms

The products and services offered on the Velmie banking platform include cards and accounts, digital P2P payments and transfers, digital onboarding to meet Know Your Client, Know Your Business and Anti Money Laundering requirements, and many innovative financial software solutions.

Clients can also build a turnkey wealth management and brokerage platform within a matter of months rather than years. The Turnkey Advice and Planning Platform (TAPP) offers clients a best-in-class omnichannel experience built on cost-effective and compliant cloud infrastructure. The platform facilitates multi-asset trading and connectivity to core banking systems, with powerful security and compliance tools some of the key components of the software.

The Platform is entirely cloud-based and hosted on Amazon Web Services (AWS) servers, providing a highly scalable offering in the most flexible and secure cloud computing environment to date.

With access to digital solutions like this, private banks can benefit from the fintech revolution that has seen small agile innovators disrupt the traditional banking industry. Software providers like Velmie offer banks that have been around for generations the opportunity to partner with innovators that have a track record in developing digital solutions that will enable them to meet the needs of their next-generation client base.


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