The following is an article from the Singapore Business Times, January 13, 2010, written by the Managing Director and Head of Private Banking Southeast Asia and Australasia for Credit Suisse, Dr. Francois Monnett.

He gets it, but do they really “walk the talk?”

Retaining clients, rebuilding trust

The sustainability of the private banking business model comes under scrutiny in the wake of the massive industry shake-up. In the aftermath of the massive industry shake-up which has taken place over the last 18 months, we are confronted with a very different operating landscape in private banking. Together with a significant loss of trust and confidence in the markets and industry, clients are also expecting higher standards of service and advice, as well as greater transparency and disclosure over products and services. There is also a shift towards safer, simpler and more liquid investment solutions.

One major implication is the critical question of the sustainability of the private banking business model. During the boom period, many institutions built their private banking model primarily based on the assumption of continued growth and perhaps a certain belief in its immunity to economic cyclicality. The infrastructure that many private banks have put in place to deliver value to clients and the fact that much growth has been built through expensive acquisition of bankers have also resulted in a costly model.

Revenue generation in private banking, particularly in the Asia-Pacific, has been very much volume-driven with a heavy reliance on a sales culture. With slowing revenue generation and increasing cost-income ratios in the past 18 months, the sustainability of this business model has been seriously tested. Much of the pressure is also coming from outside, namely from regulators and clients, that will propel the industry towards more radical and dramatic changes to the business model.

In the rapidly changing regulatory environment, investment suitability is here to stay and investor protection will become an even more important dimension in this business. There is also a lot of discussion on offshore banking, capital requirement and bankers’ compensation.

But the most important driver for change is the disillusioned clients. There has been a significant loss of investors’ trust and confidence in the markets, in regulators, in the financial institutions as well as their advisers. We have also observed among clients a flight to safety and quality, a shift from risk aversion to loss aversion, and a back-to-basic type of appeal for more direct and liquid investment vehicles.

Very importantly, there is a much greater need for transparency and disclosure. This is not just about the products, but also the service levels that clients pay for, fee structures, performance of their investments, as well as transparency regarding business partners and counterparty risk.

Client segmentation

For private banks to reclaim and reaffirm their critical status as trusted advisers, we need to enhance our value proposition on a few levels. First and foremost, we need to focus on client segmentation and differentiation to significantly lift service levels.

To put the client at the centre of a segmentation strategy is the only way to avoid the ‘one size fits all’ approach, which doesn’t work to lift service levels. This requires a disciplined, systematic and structured approach to defining client segmentation that goes well beyond assets under management. It has to consider the source of the client’s wealth – is it inherited or built? It has to consider the investor’s behaviour – is he or she a delegator, a participator or self-directed?

We also need to understand better the investor’s knowledge, experience, sophistication as well as domicile. Once these dimensions are clearly mapped out, the resulting value proposition has to deliver a tiered service offering in a disciplined and consistent way that will define different access to product specialist or management as well as the depth and breadth of the service offering.

Eventually, we will be measured as well in terms of the level of transparency and interaction we achieve with our clients. Risk management has to be an integral part of the advisory process and an investment suitability framework is the ultimate transparent guide to portfolio construction.

This involves the profiling of clients – the detailed and structured assessment of their knowledge and experience vis-Ã -vis the complexity of the portfolio solution, and their risk and loss tolerance. This profile is used to build a portfolio which is simulated in terms of asset allocation and is fully disclosed to the client.

Consistent client experience

The private banking business is all about execution. We need to deliver on the promise of being a trusted adviser in a consistent way. A major pre-requisite for a consistent client experience lies in the bank’s IT-based processes. From the relationship manager (RM) accessing an open architecture platform with thousands of solutions for the client, implementing a common advisory process, to utilising portfolio construction tools that build asset allocation against the client’s profile and analyses of risk scenarios – this level of consistency can only be achieved through a control process.

The re-engineering of processes is critical not so much for productivity gains, but has enormous impact on how much time the RM is able to spend with clients and the quality of the client experience. A recent study shows that RMs spend as much of their time marketing services to new clients as solving and dealing with administrative matters. If we are not able to free RMs from the loss in valuable client-interacting time, we will not live up to the promise of being a trusted adviser.

From a client perspective, there is also a constant request for better, more consolidated and comprehensive client reporting. They also want more direct access to almost real time data through client portals.

As private banking continues to grow in the Asia-Pacific, automation, IT systems and the re-engineering of processes will increasingly become the backbone of the business. How good a bank’s infrastructure is will be the cornerstone in delivering quality client experience. It will optimise relationship management time with clients and ensure a culture of consistency throughout the firm.

Re-skilling of RMs

If we want to differentiate ourselves in terms of providing an advice-centric operating model to clients, we will also have to consider the extent to which we need to re-skill our RMs. The permanent education of RMs is of paramount importance. Particularly in Asia-Pacific where the industry is still young and fast-growing, there is an immediate need to make sure that the culture of a firm is being consistently instilled into the new joiners that all bankers interact with their clients through a consistent and structured advisory process.

Eventually, as front organisations continue to expand, we also need to enable RMs to grow in their roles over time, from a junior level adviser, to an expert RM or a manager and leader. This requires a long-term, modular and state-of-the-art training curriculum and development model that captures the career cycle of each RM. It is also important to align reward systems with the clients’ satisfaction. When we measure performance, we need to focus not only on ‘What financial performance did you achieve?’ but also the ‘How did you achieve it?’ metric. This softer side of performance measurement has to be benchmarked against the values of the bank and how it wants its RMs to run the business, and against the client’s satisfaction. This will involve tracking the degree of adherence to the sales and advisory process, risk management tools and control standards, as well as client satisfaction surveys.

This greater alignment is a condition for regaining and earning more trust with our clients in the new landscape, acknowledging the new landscape, refining and sharpening the value position and eventually delivering on a bank’s brand promise.

Trip Allen, Team Egyii, Singapore

 (A true story)

Successful.

Uneducated.

Wealthy.

Four priority bank accounts.

Four banks.

Four different Relationship Managers.

There is a fifth bank that also wants his business.

The fifth bank will get his business- if they do it right.

Why and how?

This particular “prospect” is an acquainance of one of the bank executives. The prospect is open with the executive, shares his personal life, discusses business matters and financial matters, socializes regularly with him, talks sports and even shares aspects of  his social life. He respects the bank executive for his knowledge and there appears to be no threat. He is comfortable with the relationship. They are friends. 

Interestingly enough, the bank executive is not a relationship manager- he is not in sales.

How does the bank executive do what is best for the bank, and “convert” this into a sale? That is the dilemma.

Clearly the “prospect” is an unsettled man. He has new-found wealth and is somewhat leery of the people around him. This is probably why he spreads his wealth between four banks and four relationship managers.

How many times have you come across this or a similar situation to this?  A situation where there is a bond or relationship between a client or prospect and a non-sales related executive? From my experience in my days of technology sales, quite often the relationship was between the client and the sales engineer. Is that because there was no “threat” from the sales engineer? Was he providing more value? Was he not chasing the sales for the close?  Most probably.

So why is this happening and why does it happen? And how do we turn the banking scenario around and turn it into a “sale?” I will let you figure that out on your own.

For related articles (and for a clue to why this may happen) see:

Two Simple Keys to Success in Sales

Want to Add Value in Your Sales “Process?” Try Adding Trust

The Agile Mind of a Salesperson: Motivation

Trip Allen, Team Egyii, Singapore

The Egyii team recently attended a financial services briefing in Singapore, hosted by Gartner, one of the global leaders in research and analysis.

The following is some of the advice offered to the Singapore and global banking community.

(Highlighted in Bold Italics are quotes from the analysts. The rest  are comments from Team Egyii)

Technology can help but it’s not the be all to end all. CRM systems, online support, Etc are important, but facing the client (face to face), is more important.

Banks going back to basics- focus on core business away from the peripherals. Too many complicated programmes were rolled out over the years. This caused too many problems and contributed to the  collapse. Keep it simple moving ahead.

Be more inclusive with clients as they have lost your trust. Remove yourself from siloed thinking and involve the customer in more decisions.

Best innovations come in time of bust- don’t stifle innovation. If you wait you will be left behind- you will never catch up. Be  bold- try new things, otherwise someone else will beat you to it.

Life goes on (during the crisis) so understand what your customers are doing.  Don’t put everything to a halt as business continues- keep client focused.

Internet usage and popularity in Singapore facts and stats: Facebook ranks 4^th, users spend avg 23.2 mins. DBS ranks 17^th, users spend avg. 4.1 mins. Times are changing.  How do you engage and listen to the voice of  your clients in these times?

Customers  say- “It’s my money, so listen to me.” Retailers get it & respond. Banks don’t. How do you respond to your clients needs?

Banks need to get more advice from peer groups. The web community is one way…face to face is another.

Know me (the client). Know my life. Retailers know it & get it. Banks don’t.” retailers engage well with clients why don’t financial organizations?

The client is pleading…”Please. I need a helping hand. Help.” They are calling for you- respond please.

How many helpful and meaningful  messages have been sent to customers during the crisis about what is really happening (and what to do about it)? 0- zero.” (from research of 25 major banks) Banks need to communicate better, not just from a broad sense but from a personal sense.

Customer experience is about building trust and understanding the entire customer experience process. Don’t segment it- look at the whole experience and the different ways of delivering it.

Customers want help. The financial organizations are not there- they are too internally focused. How do you focus on the client when he is crying for help?

Your customers have interests outside of banking and insurance. Look beyond the immediate financial services relationship. Look at building personal relationship where you can…

In conclusion, times are tough but you must forge on. Don’t sit back- take advantage of the situation as you will benefit long term. Keep it simple and focused on the client..

Trip Allen, Team Egyii, Singapore

Things are heating up!

Egyii is featured in an article titled “SMEs Send Out the SOS: Seven SME Owners Tell Their Stories from the Recession Frontline ” from the Singapore Business Review,  July 2009.

“Stay focused, stay flexible and stay on board.”

For the complete article, click here.

Trip Allen, Team Egyii, Singapore

According to a recent study published by Dow Jones titled “Wealth Management After the Crunch,” the following numbers on banks’ performance were presented: 74% of the banks in Asia thought they over-performed through the crisis whereas 91% of the US banks were under the illusion that they performed well.

But, the reality is just 29% of the clients concurred with this.

The author, Bruce Weatherill, a former PWC consultant and now representing his own firm Bruce Weatherill Executive Consulting, states: “Clients are saying they look for service from life to death to the next generation. Wealth managers are delivering that by changing advisers very frequently moving in and out of markets. They don’t understand to be successful, wealth managers need to provide security, a long term vision and not just transactions.”

As for trust, Mr. Weatherill states that 65% of the wealth managers in Asian banks think their clients see them as “trusted advisors.” 

But, again the clients have a different perspective on this. Only 32% agree with this.

Mr. Weatherill states in the report that “Wealth managers underestimate the loss of trust that has resulted from the credit crunch. They need to recognise the damage and work rapidly to repair it.

There are other statistics around low numbers of loyalty between clients and the wealth managers, disagreements on the clients’ view of performance Vs the banks, Etc.

All of this leads to dissatisfied clients and all in all it is not positive (to say the least).

So much so that many of the clients are switching to other institutions and private wealth management firms.

We all don’t need to have these numbers to recognise that there are levels of denial and a lack of real client focus.

When will the banks and other financial institutions realise that it is time for a change?

Trip Allen, Team Egyii, Singapore

Press Release! Hot off the wires..

Singapore, May 25th, 2009

Egyii, the Singapore based learning and development consultancy, has announced its launch into the Consumer and Retail Banking space, leading with a new perspective on “customer experience.”

Egyii will continue to focus on its current agenda of Priority and Private Banking but will expand into Consumer and Retail Banking with more thought leadership, web based material and customized, in-house curriculums.

Trip Allen, Egyii’s Director of Sales and Marketing, says “The Consumer and Retail space is a logical choice for us. In fact, the banks have requested that we move into this space. And with customer experience initiatives in banking being a top priority, it makes sense that we link all the different banking programmes together.“

James Irvine, Egyii Director of Programme Development, says “Financial organizations are struggling and it is the customer who is suffering, causing a break of loyalty and trust and a loss of business.”

“Bankers can continue to focus on re-engineering products, systems and policies. Alternatively, they can break the mold and focus on the customer and the customer experience.”

For the “Improving the Customer Experience in Banking” white paper: White Paper

For our updated overview, please see:

Egyii Overview May 2009 

Thank you.

Trip & James, Team Egyii, Singapore

How are the banks listening to the clients/customers today?

I have been reading blog articles by and speaking with some of the Forrester and Gartner (my former employer) analysts recently. Both companies are  research and analysis firms for the technology industry - and there is a lot of buzz around utilising technology to “listen” to the banking clients.

I am noticing two things:

The customer experience (or as we at Egyii call it “customer proficiency”) is the banks’ biggest concern.

How to address the voice of the customer?

Communities

As networks, the Internet and overall communications have evolved, the world’s voice has become global. And even though it has been global, communities have formed- both locally and globally.

Many of you are aware that traditionally communities have been formed and are a means of discussing issues and sharing ideas - as people in communities have a lot in common. The platforms could be through town hall meetings, mahjong games in HDB flats, tribe gatherings, Etc.

Today, communities can also be formed digitally and continue to be formed personally (face to face).

The Social Media Phenomenon

What is happening globally and locally? Digital communities are being formed using  social media.

Ning. Facebook. Twitter. Votigo. Linked In.

And it is just not youngsters or Gen Y.

The old folks (like me- Boomers) have the biggest, recent  uptake on Facebook.

And big and small companies are doing it , too.

So, what are companies doing to take advantage of the voice of the client today?  They are using social media to capture the voice and are making quick changes based on the clients’ immediate input and needs.  It is all very real time. A recent article in Advertising Age states “The Internet has made it easier than ever for consumers to get their opinions heard — and for marketers to listen.”

One example is Ford Motor. “Social media has helped Ford quickly achieve its goal of being a top social brand and has broken down the more conservative communications processes that were in place,” said Scott Monty, head of social media for Ford.

On a Local Level – Singapore

A recent report showed that Internet users in Singapore spent 50% of their time on social media (community) sites. Wow! How to capture their attention?

In Singapore, we are well connected and very savvy. We use communities (whether you realise it or not) to voice our opinions. Everyone is listening.

The Banking Environment

Are banking clients talking, forming communities?

You bet they are. On line and and personally (in places like kopitiams – local coffee shops, Etc). They are sharing the stories. The heartbreaks. The downfalls. The successes!

In banking, the trend to move digitally has been slow.

Because some banks are slow in the uptake of using technology to listen to the client, personal (face to face) communities or sessions can be formed to fill the gaps. Until they are” up to par” digitally, banks need more proactive events or sessions where the client is comfortable in expressing his opinion. One suggestion is a simple  face to face, one on one “community” with the client (make sure the client is comfortable). Nothing beats that.

But don’t wait to long. The clients want a digital community in banking. They want to voice their opinion. It will happen.

So, how will you build your bank’s community so that you can hear the real voice of your banking clients today? Banks need to be more sensitive to the voice of the client. If it is not done digitally, find some old world ways of doing it.

Trip Allen, Team Egyii, Singapore

The Singapore Government, through the Monetary Authority of Singapore (MAS) has made a bold move into the world of Islamic Banking to step ahead of their “competitors.” Congratulations to MAS for putting egg on the faces of the Hong Kong business community (and the Malaysian banking community who has traditionally held this post in the region), as per the following posting in the HK Standard Charting a Safer Route…

The government has also instituted numerous learning and development programs in the banking community through a few of the local learning institutions to bring up the standards in the banking and finance personnel. I have heard from numerous sources that a lot of money and time has been put into this with little results.

Singapore’s business community relies heavily on the government to make decisions to protect the businesses and ultimately the working people. I am not knocking this and believe it has contributed to the success of Singapore. I am pretty sure  that the government and the business community are aware that this time around, things are different and that decisions from the top may not encompass all the answers.

Do they know the difference between the “old world” of business and the “new world” of business? Probably not as reflected in their actions. What about personal development, motivation and effectiveness skills in Singapore? These areas have been overlooked and need serious considerations.

We believe the solutions lie in the people. Your people upfront  make the difference- and that difference will move the business community ahead to an area of true cometitiveness.

For more see yesterday’s posting How to Repolish the Banking Image…

Trip Allen, Team Egyii, Singapore

Today’s ‘crazy’ financial services market presents flexible, forward-thinking financial industry players with an opportunity to gain a competitive advantage and grow their business.  This is the time for change. This is the time for those responsible for client contact to stand back and take another look at how they influence their clients.

To date, banks have emphasized product over relationship by offering what seemed like good returns on a whole host of financial products to a hungry audience. The time has now come where, like a guilty husband who has cheated on his wife, they have to re-seduce their clients. They have to be sensitive, caring and patient, all the time approaching their clients gently and testing the water.

This style of influence emphasizes the relationship first and foremost and the product a relatively distant second. But true relationship-building requires more than knowing how to ask the right questions to uncover recognised and unrecognised needs, and present a tailored solution. True relationship-building requires authenticity on the part of the Relationship Manager. And a client can sense when a Relationship Manager is inauthentic, however smoothly he runs through the sales process. 

This means there needs to be a focus on the second-by-second human behaviours passing between people. Relationship Managers need to learn to ‘calibrate’ effectively, which means paying attention to the many small signals their client is sending through their face and body language, their tone of voice, and the words they use. In this way they can ‘enter’ their client’s world and see the situation and themselves through their client’s eyes.  As Henry Ford said, “If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.”

Why is this so important? Because being able to see through your client’s eyes opens the window to what she truly wants. And as we all know, the secret to winning other people’s trust and loyalty is to give them what they want. And at the end of the day, in addition to products and solutions, your client wants to be heard and understood. Then you can start writing your own cheque.

So take a minute to think about the way you behave in front of your clients. Eliminate everything from your mind, including your well-prepared script and your client strategy. Just go in there and open your mind to the world offered to you by your client. Treat your client like a great teacher, there to help you go places you have never gone before.

Bank clients today are like swinging voters. They are neither Republican nor Democrat, but are lost as to which way to turn and ready to turn towards a bank which can win their trust. What an opportunity! Go and get it!

James Irvine, Team Egyii Singapore