Why are clients turning their backs on high-street banks?

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Why are clients turning their backs on high-street banks?

In the rush to move customers online, mainstream banks are beating a retreat from traditional private banking. Yet as Stephen Buckland reports, the pandemic crisis has led many clients to review their financial affairs and come to the conclusion that they want to know the person who’s looking after their money.

Something extraordinary is happening in personal banking. I'm in my mid-50s yet I’ve never worked as hard as I have over the last 18 months – and it’s the same for many of my colleagues. Private banking is in demand. Since the first lockdown, a huge number of both deposit and loan clients have chosen to move away from the high-street banks.

There was a time when anyone could speak to their bank manager but, for customers of the big banking groups, those days have long gone. And now even the branches are disappearing. According to Which?, there have been a total of 4,300 bank and building society branch closures since January 2015 and, as we reported in May, the pressures of the pandemic crisis have prompted a surge in cost-cutting and digitalisation across Europe’s biggest banking groups.

And while mainstream banks are increasingly averse to human contact, they’re also whittling down their private banking services. When Barclays recently announced that it was making 300 of its Premier account managers redundant, it starkly illustrated the growing reluctance of mainstream brands to offer private banking in its truest sense. Changes are also afoot at Adam & Co, following the sale of the bank’s investment arm to the Cannacord Genuity Group earlier this year, with banking clients expected to be absorbed into Coutts/Royal Bank of Scotland.

Sell, sell, sell
In addition, many of the group-owned private banks (and several of the independent ones) are increasingly focused on trying to sell their clients wealth management products. This is another reason why many clients are jumping ship, and it’s also why Hampden & Co concentrates purely on banking. We believe it’s better for our clients if we, as their trusted banking adviser, work closely with their other trusted advisers – be it their wealth manager, accountant or lawyer.

As a result of all this upheaval, many of the people now turning to us perhaps don’t fit the stereotype of a private banking client. They’re often younger business owners who, as well appreciating the benefits of direct access to their personal banking director, value the convenience of our complementary digital banking service.

Many of these new clients tell me that they simply weren’t receiving the service they needed and expected from the mainstream banks, particularly during lockdown. Prompted by the strange times we’ve been living through, many reviewed their personal and financial affairs and decided that they’d had enough of call centres, waiting times and virtual assistants. Instead, they wanted to entrust their money to a bank where there would always be someone at the end of the telephone who understands them and can help them out.

No anonymous call-centre workers

During the past 18 months, I’ve also worked with clients who have come into a significant sum of money, perhaps through the sale of a business. Many of them have told me that they feel the high street is fine for day-to-day banking, but with larger sums, they want to meet the person who is going to look after their money. For them, and for other clients with complex or unconventional finances, waiting 20 minutes for an anonymous call-centre worker to pick up the phone is not an acceptable option.

Many are also pleased to hear that we don’t have hard and fast rules about the amount of money that someone must put down as a deposit or seek to borrow for them to become a Hampden & Co client. Every case is unique, based on the person’s individual circumstances. For instance, someone who might not fit our perceived criteria today may be planning to sell their business next year, in which case we may be able to help them now. Private banking does cost a little more, but our clients stay with us because they quickly appreciate the benefits.

I expect that I’ll be working just as hard in 2022 – perhaps even harder. But if that means helping even more clients to escape the world of call centres and enjoy the value of true private banking, I’ll be more than happy to put the hours in.

Stephen is a banker in our London office.

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