Customer response to this strategy is quite good because the strategy is also easy to be accepted by the market. This is evident with the growth of wealth management banking segment.
Challenges Ahead
However, this strategy cannot stand alone because over time, this strategy will only add to the cost. Not only that, but also offers preferential pricing will hit bank earnings as fee-based income and a smaller spread (the difference between interest income of the bank) smaller (because this offer will attract depositors who ask for deposits with high interest rates).
Not to mention the value-add or benefits offered to customers will slowly erode due to the success of this strategy.
Example: XYZ Bank imagines those only rely on access to airport lounges as wealth management proposition, and suppose this is a successful strategy. Thus, Bank XYZ can easily get new customers. As time passed, the number of XYZ Bank wealth management increased.
With increasing wealth management, the longer airport lounge is a mainstay of Bank XYZ is going to be crowded and comfort is reduced. It is envisaged that in the next period, the addition of new customers XYZ Bank would be reduced.
Meeting the Challenge
The banks that offer banking wealth management should consider four factors supporting success for developing the other two pillars, that are advisory and products.
These four factors are supporting:: HR, Technology, Process, and Product Distribution. HR, Technology and Process, are the three things that are very important for the bank to obtain the right to have the channels of distribution.
Mastering the distribution channel is very important for a serious bank in selling agency working activities. Especially when the difference between one product with another product that is very thin.
Human Resources
HR licensed, and has the ability to:
- Analyze products sold,
- Analyze customers' financial needs,
- Analyze the ability of clients to take risks, and
- Analyze the advice and recommendation of the products of non-traditional, will be able to contribute to the bank to increase the fee-based income for the bank.
To achieve this, a bank must have a thorough training program, good understanding of the product, advice based relationship selling skills, and understanding of the formation and review of the customer portfolio.
Not only that, these skills must be continuously updated on a regular basis, given the nature of non-traditional products are highly dynamic.
Process
In the case of bank product sales activities, the reputational risk, operational risk and legal risk, are risks that must be continually monitored. This can be managed by having a process set out in the SOP (Standard Operating Procedure).
SOP should be properly designed and includes control functions are sufficient to mitigate the possibility of miss-selling (i.e. selling too promising) or operational errors. SOP should be designed to:
- Transparent,
- Easy to understand,
- Contains specific controls that can deliver the red flag and / or a hard stop to the next process if it does not meet the requirements,
- Contains an adequate monitoring process
for example: quality control to customer surveys for transactions conducted by customers.
Technology
The implementation of high technology can help banks in the business of wealth management in corridors have been determined.
High technology can help to:
- Monitor the transaction,
- Monitor the sales process and execute transactions efficiently and transparently. (E.g. the use of end-to-end straight through processing which includes the sales and transaction processing)
- Process simple transactions (e.g. e-banking, etc.) and secure (secured)
- Prevention of improper transactions (e.g., preventing the purchase of products that do not fit the customer profile)
Product Distribution
With the fulfillment of the three elements above the bank's credibility in offering non-traditional products will increase and grow customer confidence. With a trust, the bank may record good sales.
Good sales results in the end will give room for the bank to negotiate dealer exclusive new products issued by product providers.
With four supporting elements above, banks have wealth management segment can provide added value is more than just gifts and privileges (privileges).
With the development of these four things, ideally, customers can get advice, conduct financial transactions / investments that suit her securely, whenever and wherever he is in real time, while enjoying a vacation package has been prepared by the banks offering wealth management services.
0 comments