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In this article, published in the last edition of Paperjam magazine for 2019, Luc Rodesch considers the key challenges facing the private banking sector in the coming years.
In 2020 and the years to come, private banks will continue to share the same challenges faced by all service providers: meeting clients’ needs by offering them a high-quality, value-added service while ensuring strict compliance with the prevailing legal and regulatory framework.
Managing regulatory requirements
As well as costs, regulatory requirements create a considerable administrative burden, which takes away from the time dedicated to advising clients. Private banks must scrutinise transactions and carefully document the origin of clients’ funds, a growing formality which is not always welcomed by private clients who have traditionally valued their privacy. Yet this strict compliance is necessary to maintain the good reputation of our financial market and, more broadly, our country.
The private banking “conductor”
The entire banking sector is undergoing a period of historically low interest rates and rising costs, which are placing margins under stress. Against this background, private banks can no longer base their growth on standard low-margin services. To stay competitive, they must strengthen their appeal by looking beyond classic asset management and offering solutions for complex wealth and family situations, cross-border financing, private equity, etc. Today’s private banking clients in Luxembourg are increasingly wealthy and international. Their needs are more sophisticated and they expect these high-value services. More than ever, private banking advisers need to take on the role of “conductors” who are able to harmonise the bank’s offer and, if necessary, direct clients towards the most relevant specialist.
The digital revolution
While personalised support is still very important to private banking clients, they are also becoming more mobile and connected. They want to be able to continue their banking experience on-line, securely, from any location and at any time. Private banks must pursue significant investment in new digital communication channels in order to meet their clients’ growing demands in this area.
...but trusting relationships will always come first
Client relationships, trust, contact and proximity remain the cornerstones of our profession. These are key to long-lasting partnerships and will never be shaken by the digital revolution. The added value of a private bank lies in its ability to understand families and offer them support that goes beyond straightforward asset management.Luc Rodesch, Member of the Executive Committee, Head of Private Banking, Banque de Luxembourg