Having been reasonably fortunate as a high-tech CEO, I am a private banking client of a top-three global investment bank. In my experience and in the experience of my friends and colleagues, private banks do a mediocre job of meeting our needs.
For example, many private banking clients invest in venture funds that offer the possibility of extraordinary return, but generate enormous amounts of account management work. Yet, private bankers can offer little or no support for this work because they only track assets under their banks management. Time-constrained wealthy individuals still have to perform time-consuming bookkeeping to find out where their assets stand. (Seeing this, Jim Clark, founder of Silicon Graphics, Netscape, and Healtheon, established myCFO.com, an advisory that simplifies the complex financial lives of affluent people.)
Banks central flaw is the absence of a central record of customers financial interactions, regardless of whether the asset is under the private banks direct control.
Here is a secret that explains why most banks do not have true customer-focused private banking relationships: They are not ready for it. Since they cant merge customer records or data flows, they cant provide the service level that the affluent need.
What holds private bankers back are the same types of archaic processes, ingrown culture, and old technologies that held U.S. manufacturers back until, in the 1980s, competition drove them to reform. Today in private banking there is a rush to change in response to competition, but bank CEOs need to recognize the larger problem and commit to the things that will get the job done.
CEOs often take on more than they can handle, and the result is frustration as technology projects move too slowly or fail outright. Instead of going for the ultimate solution, they should take smaller steps with a high probability of short-term benefit. During this process they will learn that customer-focused private banking involves more than technology.
It requires a fundamental rethinking of how to approach high-net-worth customers, one that crosses processes, tactics, skill levels, technology, and strategies. Banks may have to retrain or replace marketers and information technology officers who cannot adjust. And they cannot forget that financial institutions that first master the details of private banking will gain a competitive edge.
When using technology to improve service, CEOs must first state their goals clearly. This means having an understanding of private customers integrated service needs and the underlying technology.
It is easy to talk about unifying the customers portfolio, but it is extremely difficult to achieve without a detailed understanding of the plumbing behind a simple-looking Web page, for example.
Data flows need to connect vendors, foreign investment centers, call centers, Web pages, e-mail, direct mail, vendors, and others to give the high-net-worth individual a seamless and easily understood picture of cash availability, net worth, asset categories, pending taxes, retirement plans, and more.
Todays private banking systems assume that customers are willing to vest their entire portfolio in one institution, but the fact is that the wealthy rarely vest their wealth in just one place or through just one financial services organization. They diversify.
The hardest part about moving to a unified view is getting started. Private banks that commit themselves to working out the strategic and technological steps of customer-focused banking will take market share over time. They will be successful because they will have done the hard work of providing their clients the convenience that most private banks are failing to provide now.
Mr. Ingari is founder and chairman of Wheelhouse Corp., a marketing infrastructure services firm in Burlington, Mass.