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Priority banking, more than just luxury lounge
Youâre the priority: Bank Mutiara president director Sukoriyanto Saputro (third from right), accompanied by bank director Ahmad Fajar (right) and director Benny Purnomo (left) have a chat with priority customers while watching a harpist on the sidelines of Bank Mutiaraâs customer gathering in Jakarta
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span class="caption">You're the priority: Bank Mutiara president director Sukoriyanto Saputro (third from right), accompanied by bank director Ahmad Fajar (right) and director Benny Purnomo (left) have a chat with priority customers while watching a harpist on the sidelines of Bank Mutiara's customer gathering in Jakarta. Bank Mutiara is one of Indonesia's banks with a growing number of priority customers or individuals with combined deposits as assets invested totaling at least Rp 500 million. Antara
Successful priority banks should be able to deliver value-added services.
With the sustained transformations that have taken place within the banking industry in Indonesia, it is observed by many analysts that retail banking has transformed itself into financial 'supermarkets' for individual customers.
'Depending on the services that individual customers need, retail banks now offer them a wide range of financial products,' said Ronald Sumampow, vice president of a major private bank.
The range of services offered is catered to provide for different customer segments.
'The range of services provided for individual customers can be from merely helping them to open savings accounts [with the simple purpose of depositing and/or withdrawing money] to more complicated priority banking services like advising customers on total management of their financial affairs,' Ronald added.
The priority banking services are usually provided for selected wealthy, high-end customers, the group known as high net worth individuals (HNWIs).
For wealth management purposes, HNWIs have accumulated far more wealth than a regular person, and therefore have the means to access a greater variety of conventional and alternative investments, according to wealth management practitioner Albertus Hendro.
Private banks aim to match such individuals with the most appropriate options.
Investment services
'Priority banking services help me achieve my long-term financial needs through a portfolio of investments comprising wealth-generating instruments,' said Dwiyana a priority banking customer.
'The bank helped me work out long-term financial needs, such as property investments and preparing for my retirement to ensure that my family will enjoy a quality lifestyle in the future,' she said.
Priority banks' websites specify that these portfolio comprise traditional investments such as time deposits and also mutual funds that give clients exposure to a diversified range of asset classes such as cash, bonds, equities and alternative products.
However experts agree that it is important for the priority banks to also advise customers on the associated risks of the investments.
A certified financial planner Dwi Handoko commented, 'Priority banks should help clients assess their risk profile and help them build portfolios that are suitable for their profile and that will maximize their returns within their required timeframe'.
Competition
Customers are having difficulties in telling the value difference between banks priority banking services, hence banks need to differentiate their priority banking services to win over customers.
'With the increased number of priority bank services and intense competition among them, Indonesian banks have taken note of the wealthy or affluent customers as the opportune niche market or segment that can contribute to the banks' growth,' Ronald said.
Reports have indicated that for priority banking, brand is important, and survey respondents claim brand value to be their biggest differentiator.
Supporting the report, Ronald added, 'Clients want to be with a bank that is firm and secure, with a reputable brand, but if everyone is trying to do it, how can one bank show it has something more to offer?
A priority banking customer who prefers to remain anonymous said, 'From time to time I look at sales packs from different banks, and the only differentiator is the picture on the front cover'.
'The priority banks that are going to be the most successful are those who can exhibit that they are delivering value-added services,' he said.
Arnold Adam, a priority banking relationship manager with a major private bank in Pondok Indah, explained that priority banking displays an exclusive, upper class image through the delivery of personalized service provided in exclusive priority outlets or bank lounges'
It has been observed that priority outlets are designed with luxury interiors similar to five-star hotels to welcome customers for banking business and/or consulting activities.
Priority banking offers other benefits or privileges not necessarily related to a bank's main products.
'Apart from a bank's financial products and services, priority banking offers other products/services such as free magazines, medical advisory, travel advisory, customer gathering, life style and business seminars, entertainment invitations, concierge services, airport handling, airport transportation, birthday gifts, etc. to match the customer's life style,' Arnold further explained.
'Priority banking is available to our clients, individuals with combined deposits or assets invested totaling at least Rp 500 million,' Arnold said.
What's next?
'In addition to providing exclusive investment-related assistance, priority banking goes beyond managing investments to address a client's entire financial situation,' said Albertus.
Priority banking services clearly have to offer more than asset management in order to gain the status of trusted advisor, according to Albertus, a wealth planner.
'Many banks will claim they have this role, but do they really?'
He explained further, 'It involves offering a overall range of services from birth to death 'healthcare, life insurance, trust services, risk analysis, portfolio consolidation,'
Certified financial planner Erisman Syarifoeddin commented that to earn the status of 'trusted advisor', priority banking services need to be tailored to each individual depending on their stage in life, career, or source of wealth.
'Services should include protecting and growing assets in the present, providing specialized financing solutions, planning retirement and passing wealth on to future generations,' Erisman said.
Analyst reports indicate that up to now not many banks can claim to have successfully segmented their clients in this manner.
Many have segmented clients by net worth, which may be helpful for the bank, but for clients, it is quite worthless. 'It's about being a one-stop shop for a client, delivering products and services that clients really require, and it is a very formidable proposition,' Erisman said.
(Achmad Istamar)
