There may be significant openings for expansion
A number of private banking brands have left the UK market or been absorbed into other brands, according to private bank, Hampden & Co.
Adam & Company is one private banking brand that recently disappeared from the market, following in the footsteps of Duncan Lawrie and Bank of Butterfield.
As a result, Hampden & Co has attracted new clients and hired from other banks to cater for client growth.
Graeme Hartop (pictured), chief executive of Hampden & Co, said, at present, there is significant opportunity for expansion from those private banks remaining in the sector due to the disappearance of other brands.
Why have private banking brands left the market?
Hartop said the number of private banks in the UK is relatively small, and, at present, is only getting smaller.
“Some of the brands that we have seen disappear has stemmed from rationalisation by much bigger banks; a good example was the Adam & Company brand, which disappeared from NatWest. That came from the rationalisation of the brands within their portfolio.” Hartop said.
This has presented openings for those players remaining in the market to develop their brands, Hartop said. He said many people are getting wealthier, and he believes there are a lot of people who would benefit from private banking that likely do not bank with private banks at the moment.
Distinguishing a private banking brand
The key when distinguishing a private banking brand from a mainstream lender, Hartop said, is the relationship that the bank has with its clients.
“All our clients have nominated bankers and a small team of people around these bankers, so that the client knows they can contact their banker or one their teammates anytime,” he said.
Hartop said customers value that capability, particularly for more complex financial requirements. While Hartop said that mainstream banks may overlook lending requests if they do not meet their strict criteria, he added that private banks can take a more considered approach.
Impact of private banks exiting the market
“There is huge opportunity currently and we have certainly seen that in the growth over the last few years, which I expect to see continue going forward,” Hartop said.
Hartop said that this is particularly evident when you look at the mortgage side of the marketplace.
“The volume that is still there at the high end of the market is clear to see,” he said.
Looking at the depth of private banks’ mortgage offerings over mainstream lenders, Hartop said, the former offers each client a nominated banker who is available to discuss a client’s unique situation and tailor services to meet specific needs.
“While many mainstream banks rely on algorithms and a formulaic approach to lending decision-making, private banks can typically take a more holistic view of a client’s finances when assessing affordability and can adopt a bespoke solution when structuring a mortgage,” he said.
Hartop said that although private banks’ lending rates are competitive, on average, they are typically higher than those available from mainstream lenders. However, he said that clients understand this and value the personalised service and tailored approach they receive.
“Clients often choose a private bank for the personalised service and for the ability to talk to an expert banker who knows them, whenever required,” he said.
If their finances are complex, Hartop said customers normally value the ability a private bank has to take a more holistic view when structuring any banking solutions.
“Typically, customers move because they are disappointed in the service they receive from their existing bank, for example through branch closures and then being forced online or into using a call centre where queue times can be lengthy,” Hartop said.
Do you believe with the exodus of private banking brands from the sector, opportunity will follow for those remaining in the market? Let us know in the comment section below.
