Does a bank VIP account make sense?
Private banking services are reserved only for a selected consumer group. Clients of the so-called “private banking” can count on, among other things, the use of an individually developed and long-term strategy of wealth management, professional advice or prestigious credit cards.
Personal banking and Private banking
The two concepts are very similar to each other, but they do not mean the same thing. What are the main differences between them?
- Private banking – that is private banking. It is an extensive offer for the most affluent customers with not only High earnings but also large assets. It is characterized by a highly Individualized approach. Apart from the standard offer of accounts, cards, loans and deposits, it also includes assistance in managing assets and effectively multiplying them by selecting appropriate investments (bonds, shares, investment funds, etc. ). In addition, there is non-financial customer service (e. g. legal advice, medical care).
- Personal banking – that is personal banking. It is a slightly more modest version of private banking, designed for clients with above-average or High earnings, but not yet having too much capital. Clients who have an account of this type can also count on an individual approach and a financial advisor, but not to such a large extent. For a bank it is a client with prospects.
Does it pay off for banks to treat premium customers better?
Absolutely. After all, like other customers, they make transfers, pay with cards, so banks earn money on their transactions by charging fees and commissions. Such customers also take out loans, but usually of greater value than mass customers. And that means higher profits from interest, although it doesn’t have to be the rule, because VIP customers can negotiate better conditions, e. g. lower interest rates.
Premium customers can also be more easily persuaded to invest. The bank will then earn money for being an intermediary between the client and e. g. an investment fund. On the other hand, the assets invested by Wealthy customers, i. e. deposits or funds in investment funds, which are a pass to premium banking, can be converted into loans by banks. And earn interest.
Rich can more
Private banking clients invest much more money than less wealthy people, so the bank can earn more from them. As we have mentioned, the richest clients are not the most numerous, so financial institutions have to fight for every client of this type, agreeing to their different demands. A good example is the possibility to negotiate interest rates on term deposits.
Another example is the services that banks offer their Extraordinary clients. The most common is the care of a personal advisor, who is only at their disposal – by phone, online or directly in a bank branch. The customer can count on his support, help in choosing appropriate offers or receiving ready-made solutions.
Other advantages of being a VIP include special concierge services, assistance packages, discount programs, insurance, individual financial products, medical packages, asset management or investment advice. Moreover, such a client can also count on help in everyday situations – a counsellor can book a table in his favourite restaurant, a hotel room, tickets for a match or a concert, order delivery of flowers to a given address or make an appointment with a specialist. All these Privileges can be used by a special client of a given bank.