The Real Banks and The Savings Banks

It is a painful reminder how much banking has changed when you realise you do not have your AUD account number written down anywhere. How is that possible ?

I found out the hard way when I needed it in a hurry last week and had to log onto my internet banking account only to find out that they do not list your entire account number there too ! It shows up as a **** 1234 **56.

How do I get my account number then ?

Call your relationship manager. Yes. But the fellow has left the bank and I have not met the new one yet or bothered to get down their mobile after their introductory call.

Lucky for me, I keep old statements although they went electronic 2 years ago but I managed to drag out an old paper statement which committed the gross transgression of listing the account number un-encrypted.

That is the tough life of a priority banking account customer as opposed to the royal treatment of private banking and the hand delivered peaches from Korea.

What is tougher ? All my other little accounts  like my old passbook account which I keep for nostalgia. They are plain no frills relationships but you cannot do much with them except to participate in the occasional bond auction over the ATM and IPOs of course.

Banks have drawn the line in the sand these days on who is important to them. The global banks command the HNWI (high net worth individuals) and amongst them, we have the UHNWI (ultra high net worth individuals). The UUHNWI (double ultra) will of course have their own family offices, a market segment which Singapore is competing hard against Hong Kong to capture all the outflows from Switzerland and Luxembourg given their increased regulatory scrutiny and mounting tax scandals.

For the non global banks, the meaty mass affluent clients are the key. Lacking global presence, they make up for it in local brand familiarity and distribution networks. Priority banking makes the highest % margins albeit not an absolute margins for the trade sizes are smaller despite yielding obscene margins.

Mass Affluent is a common enough term in retail banking and I recall a conversation with a former colleague in retail banking about further segmenting priority banking customers into tiers for different levels of service and since the Mass Affluent customer is deemed not as mobile in banking relationships, they will not mind or know any better. As I understand, Mass Affluent refers to anyone between 100,000 to 5 million but different banks have different definitions.

What are we left with ?

The customers nobody really wants. Me and my savings passbook with its couple of grand sitting there for posterity. What a waste of time for banks indeed. I am hearing 1 account manager handles over a hundred SME customers these days. Those small little businesses that add little to the bottom line except for their balances which are all swept into the local bank’s bottomless pit of liquidity that gives them the deposit base for them to trade, to lend and to buy assets. The little customers who have no choice in banking because the minimum deposit to open a savings account in a foreign bank and local bank is different, I believe, and there are penalties for falling below.

It is a global phenomenon that no bank wants to be the savings bank and the little community banks are folding like flies in the US (157 in 2010, 92 in 2011, 51 in 2012 and over 20 this year).

I found out from a headhunter we have another bank keen to expand in…… private banking (again) here in Singapore while JPMorgan’s consumer bank is planning on more job and expenses cuts globally. http://www.reuters.com/article/2013/11/08/us-jpmorgan-consumer-idUSBRE9A70OU20131108?feedType=RSS&feedName=businessNews

Banks have cut 5,500 branches across Europe in 2012 after cutting 7,200 branches in 2011. http://www.reuters.com/article/2013/08/11/us-europe-banks-branches-data-idUSBRE97A02U20130811?feedType=RSS&feedName=businessNews

The assertion is that the world in moving to paperless world of electronic banking and banks are still keen to attract deposits and customers.

What sort of customers ? Mass Affluent please.

For 500 dollars ? Why don’t you just go top up your cashcard ?