Never have there been so many young, extremely wealthy, people. Therefore banks will increasingly have to get used to slit and scruffy jeans, worn-down shoes and skateboards, Claude Baumann writes.
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How does one imagine an attractive bank customer should look like today? Quite. In slit denims, scruffy shoes and with a skateboard under their arm. This is the view at least of the American Citibank. And it is right, I find (compare accompanying posters).
Because, never on this earth, have there been so many young, extremely rich people. Mostly they have utilized the technical opportunities to earn the money which has benefited businesses enormously. Or, they have made their fortunes by investing in virtual currencies; an area which is going to expand rapidly in coming years.
These wealthy youngsters really do look like the kids portrayed in the Citibank advertisement. With their dress code they represent the very antithesis to the classical private bank client, who cuts a well-dressed, conservative but somewhat dowdy image. A lot of banks still haven’t grasped this paradigm change. It is thus somewhat irresponsible, since simultaneously more and more non-sector institutions are cornering this young market with their financial services – be it payment systems, mortgages or investment vehicles.
With this intrusion by new financial service suppliers, the modern breed of client can access more interesting and cheaper alternatives, which definitely render traditional banks obsolete, and especially those who haven’t twigged the new realities. Instead they hang grimly on to over-priced business models, designed to squeeze their clients like lemons.
«The new rich kids on the block are difficult for banks to grasp»
Banks therefore should be addressing the profile of potential clients who turn up for interviews in torn jeans, worn shoes and with a skateboard. Admittedly this isn’t always easy. Some characteristics though do distinguish this clientele relatively well.
It is one that weighs each offer and decides dispassionately for the best. This erodes loyalty to a particular institute; especially when the most attractive offer comes not from a bank, but from someone outside the industry.
The new rich kids on the block are difficult for banks to grasp. They make money very quickly, and possibly then lose it just as fast. This makes it hard for financial institutions to place them in a classic risk profile. And so new criteria are required to properly assess this clientele.
Young clients no longer hold traditional assets like shares and bonds, but increasingly favor crypto currencies. This makes it problematic for banks, and means they miss a once-in-a-lifetime chance of serving these ambitious customers at an early stage.
Of course some of the «Next Generation» will need advice, and will turn to some private banks, but this advice will come less and less from banks, because they’re not trusted, as various studies show. Rather, young people will seek advice from friends, specialized communities or directly from the Web. What is important for them is the independence of this information.
«Discretion, highly valued and stressed by banks, plays a subordinate role amongst young people»
Some wealthy youngsters will still buy equities. However many more will be drawn to alternative assets classes like club deals, private equity and other investments, which are available worldwide through new business models in the online universe. Do the banks though possess enough know-how here?
Amazing, but true: Discretion, highly valued and stressed by banks, plays a subordinate role amongst young people, especially as they have been active in the digital world since childhood. Today we live – whether we like it or not – in a transparent world, which suits young people who increasingly reject the secretiveness surrounding banks .
«The traditional left- and right-thinking is alien to young achievers»
More important though the new clientele is globally orientated; they live here today and tomorrow somewhere else, and so banks don’t enjoy national advantages. What counts at the end of the day is simply the best offer, regardless of whether it comes from a Swiss, a Korean or an American online provider.
This new pragmatism of the future client will manifest itself in a renunciation of ideological principles. Glamour labels may be attractive, but so are sustainability criteria and unconventionality. The traditional left- and right-thinking is alien to young achievers. They are open to more innovation, and this is difficult for most banks to grasp.
In this sense the Citibank poster has captured the mood of the times perfectly. It will be interesting to see how the Swiss financial institutes react.
Claude Baumann is the co-founder and CEO of finews.ch and finews.asia, which is based in Singapore. Previously, he wrote for «Weltwoche» and «Finanz und Wirtschaft». He also co-founded the publisher Nagel & Kimche and launched business travel magazine «Arrivals». He is the author of several books on the banking industry.
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