Given the rise of social networks and technological innovation around the internet, financial institutions are launching initiatives with the aim of attracting and increasing the loyalty of more clients, and making their value chain more efficient.

Private banking, in which personal counseling and customer relations are particularly important, is one of the segments of the financial services market that can benefit the most from the implementation of new practices based on digital technology and networks. social.

Given the characteristics of financial advisory services, special attention must be paid to cultural and regulatory aspects.

These are some of the conclusions of the study presented today under the title “IMPACT OF THE DIGITAL ENVIRONMENT AND SOCIAL NETWORKS IN THE VALUE CHAIN ​​OF THE PRIVATE BANKING”, carried out by the Spanish Institute of Financial Analysts (IEAF) between the months of March and December 2010.

The study was conducted under the direction of Jose Luis Cayuela, member of the Board of Directors of the IEAF with the collaboration of the consulting firm DAEMON QUEST, an expert in strategic marketing. It has been sponsored by BBVA Banca Privada.

The work is focused on the analysis of the impacts that these new technologies are having on private banking, understanding this as an activity focused on the global management of the patrimonial needs of investment and financing of individuals and families and their cash flows on a horizon vital global. The work is especially oriented to the segment called “mass affluent” and additional segments (ie investment availabilities from 300,000 and up to 2,000,000 euros), although the conclusions are valid for all segments.

The financial advice in the world of private banking is a personal relationship that can not be replaced by technology, although this will be the key to differentiation in this personal benefit and, above all, to reach levels of competition and excellent efficiency, in a financial scenario in which the client is more suspicious, more conservative and more demanding in their expectations.

The study makes an exhaustive review of the technologies that are modifying the model of value contribution in private banking:

Support systems for personal financial planning , so that we can assess financial alternatives in different scenarios based on our expectations and needs, adding our positions and doing so independently of our usual financial services providers.

Social networks , as a new information and knowledge environment that allows us to:

  • Know trends and determine patterns of behavior.
  • Study and predict the behavior of the demand and analyze with sophisticated models the evolution of the markets of assets object of the financial investments of the clients of private banking.
  • Listen to market opinions and work on the construction of a reputation and brand image aligned with the values ​​demanded by the current customer of private banking: transparency, trust, competitiveness, agility and response.
  • Segment our markets to define specific products and services for those niches.
  • Launch marketing and commercial campaigns adjusted to the characteristics of potential customers in each market.
  • Train and inform the client to participate more actively in the decision processes.

Mobility , understanding this in its broadest version of channels of access to information and distribution channels for products and services: information follows us wherever we are, supported by multiple devices and platforms and is reinforced by multimedia possibilities; knowledge of the location and interaction of the virtual world with the real one.

This study is a continuation of the report published by the IEAF in 2006 under the title “Financial Innovation: best practices in private banking”. Now we have sought to find the impacts on the value chain of private banking derived from the application of this new technological environment, from two points of view: that of the client and that of the financial adviser.

A general conclusion is that, since the personal relationship is not dispensable, the challenge is to achieve “industrialized” processes within that value chain that support the personal service provided by the financial advisors, in two large sections:

  • The improvement of the productivity, the reduction of the costs and the homogenization of the quality and the reduction of the errors, allowing to do more with less effort.
  • The increase of information, communication and relationship with the customer to increase the intensity of the service level as well as having more knowledge and analytical skills to anticipate market developments and customer needs

In the words of Jose Luis Cayuela, director of the study, “Those financial institutions that know how to innovate and implement successfully, with creativity, these changes in their management models will be winners and will make this compendium of technological possibilities become an accelerator of the talent and intelligence that they have in their professional collective “.

Juan Carlos Ureta, President of the IEAF and the Financial Studies Foundation, recently stated, “Additionally, on the other side of the coin, the non-management of these new technological opportunities or the non-presence in social networks in a way conscious and planned derive in image or reputation risks “.