Tuesday, October 16, 2007

Attracting rich customers and how to serve them

The old adage that the customer is king is still relevant today. The increasingly keener competition in our domestic banking world has made banks not only compete to get as many customers as possible but also to maintain the loyalty of current customers by providing them with the best possible services.

This is especially the case with VIP customers, who are small in number but make the greatest contribution to banks' money circulation. These special services, which are part of the marketing strategies of the banking industry, may take various forms, such as special interest rates, offers of goods at attractive discounts or financial management services on a wider scope. These services may be referred to as personal, priority or private banking.

The size of these premium customers has huge potential. In Indonesia about 1.5 million people earn an average of Rp 500 million a year. Ravi Sreedharan, head of personal financial services of the Hongkong and Shanghai Banking Corporation (HSBC) estimates the number at three million people. As referred to earlier, the interesting thing about these premium customers is their contribution to the banking sector. Eighty percent of third-party funds controlled by BCA, for example, come from this top segment of banking customers.

That's why it is no surprise that BCA has been very enthusiastically working on its BCA Prioritas (Priority BCA) program, which requires a minimum deposit of Rp 250 million. No less than diva Kris Dayanti has been exclusively hired to make this program a success. "We have lower, middle and upper segments of customers. Special treatment is needed to manage their funds. They need more specific and more personalized services. Super-rich customers, who possess huge amounts of funds, surely tend to demand more from banks," said Meity Anita, a senior manager of BCA.

Customers of BCA Prioritas certainly enjoy better services than ordinary customers. The bank, for example, provides special rooms for them in its 111 branch offices across the archipelago. BCA has also established 33 executive airport lounges in Indonesian 19 airports. In addition, the bank periodically introduces special offers for selected products at special prices for premium customers. At present, for example, customers of BCA Prioritas are being offered Toyota Fortuner without having to place an indent.

Earlier, Volvo S60 were offered at a Rp 40 million discount. All these special offers are published in a free exclusive magazine. BCA has introduced all these benefits in its effort to maintain its premium customers, now registered at some 80,000 people holding a total of some 6.65 million bank accounts throughout the country.

Undeniably, it is the tendency prevailing among bank customers today to have a bank that can specifically study their desires, understand them and give them individual attention. These wealthy clients demand something extra not only in terms of services but also with respect to return on investment, security, comfort and so forth.

It is this challenge to which local banks are trying to respond properly. Private Banking and Wealth Management, a program devoted to premium customers, provides banking facilities in line with the development in these customers' lifestyle and living necessities. The approach is personalized and customized and should conform to the needs and desires of these customers. Every premium customer is served and assisted by a special relations manager, who helps a customer benefit from various kinds of services, including special programs, in terms of banking transactions as well as non-banking matters. Of course, this step can be taken not only by local banks. Even foreign banks offer similar services to their premium customers. HSBC, for example, has its HSBC Premier. Under this program, a customer can benefit not only in terms of investment but is also entitled to special gifts, for example a Jaguar X type, if he fulfills certain conditions.

He will also be invited to selected events, such as a golf event. In March, for example, HSBC sponsored the Indonesia Open 2006, a prestigious golf tournament participated in by world-class champions. According to Ravi Sreedharan, such offers are effective in maintaining customers' loyalty and at the same time luring new customers to the premium program. HSBC has 12,000 customers in this premier program. The number of customers grows at an average of about 30 percent annually.

"HSBC's premier customers," Ravi said, "need more than just rewards, which the bank usually promises. It is their right to enjoy an exclusive and international-standard service, but they also deserve to enjoy a series of investment and banking products specially created to meet their needs. That is why a HSBC relations manager assists premium customers regarding all their banking needs. A relations manager not only appreciates a premium customer but also understands his individual needs."

Also seeing the opportunity, Standard Chartered Bank launched a similar product, called Wealth Management Account, in September last year. This product, which is an extension of the Priority Banking service that the bank introduced in May 2001, requires an individual to deposit Rp 100 million and a business entity Rp 150 million.

Aside from offering high interest (adjusted to Bank Indonesia's benchmark rate), Darmadi Sutanto, general manager of SCB's Wealth Consumer Banking, said that this savings or check account provided comfort and facilities in transactions and had several other benefits. "We are highly optimistic that this product will enjoy an enthusiastic welcome from our clients because the premium market offers a good business opportunity," he said, adding that up to late 2005 this exclusive product had attracted an estimated Rp 1 trillion.

Among foreign banks, Citibank may be considered the pioneer in priority banking schemes. With its head office located in the Golden Triangle, Citibank calls its premium service Citigold Wealth Management Banking. To be able to join this program, a customer must deposit at least Rp 500 million.

With an account of this size, a customer can enjoy special services -- such as investment and financial management planning -- and exclusive facilities at the Citigold Center, like safety boxes, special merchant discounts and invitations to attend exclusive events such as fashion shows, music concerts, seminars and so forth. In addition, with respect to more serious financial matters, a Citigold customer is served by a Citigold relations team, which is made up of a Citigold executive, an investment specialist and a foreign exchange specialist, and also is entitled to the support of global research and the knowledge of Citibank's worldwide network.

Citigold Wealth Management Banking, which was launched in 2002 and has about 17,000 customers, is an extension of Citigold Priority Banking, a Citibank product introduced in 1980. While the Priority Banking program is focused more on exclusive services, the Wealth Management program is concentrated more on the management of a customer's financial portfolio. "It is no longer time for a bank to serve wealthy customers only with a sweet smile and a promise to understand their needs. Private banking was suitable about a decade ago. The service currently required is not product-centered, but rather customer-centered," said Lanny Hendra, vice president of Segment Marketing of Citigold Wealth Management Banking.

Obviously, exclusive customers require exclusive services. A hypermarket concept could not be applied to these premium customers, they need tailor-made products like a boutique offers. Although there are several types of investment products, what matters most is how the services offered can help customers reach their financial goals. (Burhanuddin Abe)

The Jakarta Post
April 25, 2006

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