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The Future Of International Private Banking In The Next "Normal"

By Cheyenna Calderon
 
COVID-19 has impacted all aspects of life and many of the changes it has brought will be here to stay. Private Banks post-COVID are being called on to reinvent themselves and become more agile and responsive in order to thrive in this new world. For international families and corporate entities that utilize private banks and have assets and interests in offshore jurisdictions like the Cayman Islands, COVID has brought on some enhanced expectations that Private Banks and their Bankers need to meet going forward.
 
According to the 2020 McKinsey Affluent, Private, and HNWI Customers’ Insights Survey, clients are unsatisfied with the current state of the private banking industry. For example, approximately one quarter said their main private bank made no contact with them during the COVID-19 crisis. 1/3 of clients also reported being unsatisfied with the quality of financial advice from their main bank, and at least one in five clients moved their assets to another bank, due to their bank’s poor stewardship and performance during this pandemic. 
 
So, what do private bankers need to do to overcome these new challenges and do better for their private clients going forward? 
 
Relationships 
 
One thing that has not changed is the importance of relationships. In uncertain times, more than ever, clients look to their trusted advisors. Private banking has always been about being available, responsive, and ready to deal with anything. In a pre-COVID world, this was often based on face-to-face interaction and tailored personal service. During the COVID-19 pandemic, this style of banking was not possible, and many banks found themselves unable to provide the digital, remote solutions their clients needed. 
 
Banks will need to grow comfortable and confident working across all secure digital channels for a variety of interactions, including videoconferencing, webinars, and secure chats. Customers are demanding this interaction and those that cannot offer it seamlessly, risk being left behind.
 
In digitizing service, private banks will not only need to look at what is already there, but also dig deeper and assess where technology can provide further efficiencies and make things better for their customers. A 360-degree assessment of banking processes that “have always been that way” needs to take place, placing the customer experience at the epicenter.  
 
Despite the need for digital solutions, face-to-face meetings (or via Zoom) will remain at the heart of relationship building and are certainly the preferred option for clients when dealing with complex problems or important family events and thus, need to be offered.
 
Proactive communication
 
During a crisis like COVID-19, clients want to hear from their Private Bankers more than ever.  Whether it is a market or portfolio update, how the Bank is adapting and weathering the storm, insights, and new strategies…you can never over-communicate as information is invaluable.
 
Brand commitment/purpose   
 
The value of a strong brand has long been known in private banking. Reputation, credibility, and longevity count for everything in this business. Now more than ever, banking brands need to focus on being purposeful too.
 
As stewards of wealth, banks will need to live their corporate values and vision. The next generation of private banking customers are concerned with an organization’s social purpose and will rank their social responsiveness higher than many other considerations when selecting a private bank. Private Banks will need to ensure that sustainability and Environmental, Social and Governance (ESG) are embedded and apparent in their offering.
 
 
The Cayman Islands offshore banking 
 
The Cayman Islands offshore banking sector sets the standard for banking around the world, offering world-class personal service and customer care. The industry in Cayman has experienced heightened demand for offshore banking during the COVID-19 crisis, as customers look to ensure their assets are both diversified and safe. Private Banks need to ensure they can live up to this stellar reputation. 
 
The Cayman Islands has handled the COVID-19 pandemic admirably and at the time of writing the Cayman Islands is COVID-free. Many globally mobile, wealthy individuals and their families view the islands as a safe haven. The Cayman government is in the process of developing a ‘Global Citizen’ program to complement its existing ‘residency by investment offerings’ to encourage HNW and UHNW investment into the islands. This is certainly good news for the islands’ private banks and other financial services businesses. 
 
Value through service, not products
 
Having a thorough understanding of client needs and their family members at various stages in their life will continue to be key when it comes to creating opportunities to deliver value to private banking customers as private bankers will be in a better position to offer more tailored and relevant advice, instead of simply pushing the latest products.
 
In the future, private banks will also have to consider what they can deliver to customers beyond managing their money or investments. Services such as wealth structuring, tax optimization, and helping clients to make useful connections can be tangible ways for private bankers to deliver added value to their customers, and ensure long-term relationships endure. Every workday will need to start with the question “What can we do to make the lives of our clients better today?”
 
Summary 
 
Private banks in the Cayman Islands can certainly emerge stronger from the COVID-19 crisis by maximizing the enduring relationships they have built, and by continuing to safeguard wealth for generations over the course of many decades. They must certainly adapt and be a crucial part of the support ecosystem by “stepping up their game”, but the foundation, talent, and deep experience are all here on the island.  
 
About the author
 
Cheyenna Calderon is a Relationship Manager/Private Banker with NCB Cayman Limited, a leading private bank in the Cayman Islands offering excellence in banking and wealth management services to a range of high net worth international clients and professional advisors. NCB has had a presence in the Cayman Islands since 1992 and is regulated by the Cayman Islands Monetary Authority (CIMA). NCB (Cayman) Limited is a CARICRIS ‘A-Rated’ bank.