With advanced technology nowadays, many banks have begun to offer several new special services to their worthy customers. The only reason behind serving such a special service is to grab the attention of more High Net Worth people. Thus the concept of private banking has been derived.
Financial intermediaries earn huge revenue if they can attract more and more HNWI clients. This is because the main earning of a bank relies upon the total amount of funds kept within all saving accounts. It is not uncommon that such high net worth people usually keep a huge amount of liquid cash in their bank accounts.
Therefore, a bank will always try its level best to satisfy those high-value consumers. Therefore, here we will discuss everything about private banking and its pros and cons.
What is private banking referring to?
A service from a bank especially designed for HNWI clients and because such clients even need not visit the bank to operate their accounts is known as private banking. Bank account holders who enjoy private banking generally they have their Personal Bankers. Those bankers used to serve them during their financial necessity.
Generally, people who are the owner of a million-dollar and either business tycoon or the owner of a foundation come under the coverage of HNWI. For those clients banks used to offer lots of services such as,
- Special support service which is ready to serve round the clock
- Ease of choosing necessary services out of the given list
- Provides more rate of interest on the savings account. While borrowing money, the rate of interest will come down.
- By analysing their transaction pattern, private banking offers the facility of high transaction limit even during withdrawing cash from ATMs.
- Some banks also impose special discounts if any HNWI invests in foreign currency.
- Offers such millionaire clients the ease of managing assets. The dedicated team always take care of their profit-making assets and sell loss-making ones.
- An HNWI can invest in treasury bills. In such conditions, it is important to manage such high-value investments. Private banking takes care of that.
- Paying tax is just a matter of wish while a person is an HNWI. Personal Bankers used to initiate the tax payment on behalf of such account holders.
Criteria need to fulfil for Private Banking
There is no universal criterion to get such mesmerising services. As per its standard, a bank publishes the list of criteria for offering clients these services. Actually, it completely depends upon that specific bank whether it wants to begin any such service or if it begins. What will be the criteria?
However, some banks used set criteria like,
- If a person maintains a minimum of 150000 Euros in his savings bank account, then only he gets the title of High Net Worth Individuals.
- Apart from that, the total value of his asset must be worth of minimum 10 million Euros.
- The amount of investment must not be below 2 million Euros.
- Some banks also highlight the criteria of borrowed funds. All these funds must not come under borrowed money. However, due to investment requirements, an HNWI can borrow small cash loans. But there must not reflect any huge amount of outstanding business loan under his name.
Therefore, these are some basic criteria that a bank can impose upon a millionaire who wants a private banking service. However, it is completely variable and changes from one bank to another. Therefore, before applying for private banking, a person should first check out the list of criteria that a bank publishes.
Advantages of applying for Private Banking service
According to HNWI, such a special service is one of the best initiatives of financial intermediaries. As it saves lots of time for a businessman, it is a convenient way to operate banking works for most of them. Some of the advantages include,
- Get every single service with comfort
Perhaps it is not difficult to understand how efficiently Personal Bankers work to enhance the quality of service. Apart from that, if you undergo the list of services offered by banks, you will easily understand that hardly a financial institution left any of the services. Such HNWI clients can get each and every service after successful enrolment to private banking.
- Quick problem solving
Every HNWI client has a Personal Banker. They can guide a client in such a way that he does not get any chance to complain. Usually, these clients get quick remedies for their issues, not waiting in a long queue. It saves a lot of time for a person like a business tycoon.
- Filling tax without fail
These Personal Bankers used to file taxes without any fail. There is no doubt that being so busy in most cases, such large business tycoons often miss the last date of filing tax. It adds extra benefit when he has a dedicated banking team who will take care of even the amount of tax to be filed.
Disadvantages of applying for Private Banking service
It is not unusual that a particular concept will also possess some disadvantages. Unlike that, private banking also has some disadvantages. So, if you want to get such a service, then make sure you know everything about it.
- Frequent changes of relationship manager
Many times, it has been observed that relationship managers come and go. Now, this may create confusion in the client’s mind about whom he should contact. On the other hand, changing relationship managers frequently also triggers establishing trust between the two.
- The bank may ask for high charges
Even if a bank offers such a series of services, all of them are not for free. Rather than providing all those services, one needs to pay high monthly fees to the bank. Moreover, if the balance comes down to the mentioned amount, an HNWI client must also pay the penalty.
These are some disadvantages of personal banking. Before applying for this service, one must consider these disadvantages as mentioned earlier because nobody wants to pay extra charges or lock his savings amount.
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