The personal trust business is often referred to as a relationship business, a "high-touch" profession where technology rests in the background-deep in the background. Not for long. Today personal trust is about providing optimal services; whether delivered through a human or electronic interface is increasingly unimportant. Performance counts-in terms of customer satisfaction and internal profitability measurements.
The trust department can no longer afford to be a service center that tends to the estates of deceased for the benefit of their relatives. Assets are too hard to come by. And wealthy customers have more options today. "With deregulation in banking, spreads in commercial banks have disappeared and banks are depending more and more on fees for their income. Where in the olden days the trust department could be thought of as a service arm of the bank and the bank really earned its money on the interest margin, when you take away that interest margin, you can no longer afford the luxury of thinking about trust as a service group," says Robert Clarke, president of SunGard Trust Systems, Inc.
To increase income, trust departments are shifting to a more lively customer base-those who trade more actively than traditionally stodgy trust officers. Banks have embarked on an aggressive customer acquisition campaign, says Robert Tetenbaum, evp of First Manhattan Consulting Group. Key to this is technology-relationship enhancing, sales tracking and profitability management systems to improve the revenue and productivity of the trust and investment management sales force, Tetenbaum says.
The personal trust department is also taking its cues from its corporate and institutional counterpart, which has adopted technology solutions to retain customers by providing greater value and service offerings to their businesses, says Doug Dannemiller, senior analyst in The Tower Group's wholesale banking and trust group. Global custodians, for example, are using technology to build and deliver calculation and profitability tracking tools so that customers can better understand their portfolio reports. Likewise, personal trust groups and the technology companies that service them are generating similar tools to help customers better understand and maximize their asset allocations, he says.
Technology becomes an increasingly appealing vehicle for developing and delivering services, considering that many new millionaires are making their money in technology or they're at least comfortable using it, says Dannemiller. While the majority of the largest asset holders may not be in this segment, this wealthy group does represent the greatest growth potential, which is why banks like Northern Trust, Credit Suisse, ABN Amro and Chase Manhattan Bank have all recently launched information delivery and transaction systems for personal trust customers. Some of these banks are also reaching customers over the Internet.
But linking electronically to customers is a double-edged sword, warns Tetenbaum. "Automating the delivery channel in this area meets the need of the self-service customers, but it takes away a contact opportunity (for the bank)."