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This article from
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Banking and fiduciary clients
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KAREN BLANCHARD-FOSTER
Business development manager, Investec
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To discuss the changing relationship between banks and fiduciaries, it must be recognised that trust companies themselves have changed dramatically in recent years.
There is an ever-increasing pressure to raise fee levels, particularly when more and more time needs to be devoted to compliance, Know Your Customer and money laundering regulations. This pressure also means trust companies have had to seriously adjust the amount of time they spend on their clients and become preferential towards clients who can afford fee increases. As a result, smaller clients have either moved to firms specialising in managing low-cost, high-volume business or had their cases passed further offshore to low-cost jurisdictions such as Mauritius.
There are now very few trust companies in Jersey which accommodate the smaller clients. Jersey trust companies are positioning themselves to look at higher value clients with more assets under management including larger cash balances, investment portfolios and other tangible and intangible assets. At the same time as this rationalisation, clients have themselves become much more knowledgeable. In the main clients are much more financially sophisticated and as such their expectations of what they should get from their financial providers, including trust companies, has increased substantially. As a result, trust companies are in turn expecting more from their service providers including the banks. Where time is at a premium, more so than ever, trust companies can no longer afford to spend prolonged periods on the telephone to banks simply waiting for questions to be answered or waiting for bank staff to respond to client enquiries.
The top six banks have interpreted this demand for greater, faster service and have gone down the automation route. Touch-tone keypads, voice mail, online banking, call centres in far-off places are outsourcing, generalising and depersonalising their products and their people. Call centres particularly show that the local intellectual capital, which should be provided by a bank when dealing with their fiduciary clients, very rarely exists anymore. The simple truth is that the big six have misinterpreted the demands of their fiduciary clients. In an effort to streamline their relationships they have arguably alienated the fiduciaries.
Those banks that are succeeding are those that have listened to the fiduciaries and truly understood what they need. Investec, as a private bank, has thought innovatively. There is no voice mail; instead there are direct lines. There is no automated touch-tone system; clients speak to a named person with whom they have a relationship. Lastly, none of Investec’s Channel Island fiduciary banking services are outsourced. In addition in an effort to force this automation on their clients, the retail banks are trying to outsource some of their own work onto their fiduciary clients by encouraging, and in some instances even insisting that fiduciaries undertake their own telegraphic transfer payments through the use of an electronic banking system. Many fiduciaries have told us they don’t want to make payments online, so they don’t. We do that – after all that is the bank’s job and we have an experienced team who understand the intricacies of the international payments and routing systems. Very few errors can occur this way.
The essence of this success is offering good creditor interest rates and more flexible user-friendly banking products for fiduciaries which mean that the trust companies can pass on savings to their clients which in turn encourages the clients to stay with their chosen fiduciary.
In an ever-changing world of increasing compliance it is imperative to be pragmatic and to ensure the lines of communication to the powers that be remain open. Investec maintains discussions with the regulators and interpret their regulations and guidelines in the right way, a way that the fiduciaries are happy with and can operate within.
None of this is high science. It is not about cutting edge technology. It is as basic as establishing a personal service, demonstrating an understanding of the fiduciaries business and banking requirements and delivering a very high level of customer service quickly and with accuracy. The modus operandi is to out-think not out-muscle our competition.
It is logical that this cannot be done if a fiduciary is speaking to a call centre in some distant country or trying to speak to a human being after spending 15 minutes negotiating the push-button voicemail system. Banks must recognise if they are to retain and increase their relationships with fiduciaries, they must add value and this can only be done through personal contact with people. High touch fiduciary banking is what is being sought.
Indeed, at least one of the big banks, seems to have recognised that they have gone the wrong way and is currently recalling all its outsourced operations and call centres back in-house to try to win back some of its lost business. In addition, it is critical that banks differentiate themselves through providing distinctive services that fiduciaries can recommend to their clients. One such service is Investec’s ability to provide senior and mezzanine debt for residential and commercial property markets. Also, Investec Private Bank can provide debt funding, often with equity participation to entrepreneurs and small, privately held corporporations to enable them to expand their businesses and make acquisitions.
The fiduciary market in the Channel Islands is a significant market offering real added value to the islands and the other financial services business in the islands. For a bank to succeed with fiduciary clients it is about carving a niche in an increasingly impersonal world – listening to what trust companies want and being able to deliver in a timely, cost-effective and innovative way. It is only those players in the market that will continue to grow their business.
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