What Are The Benefits And Challenges Of Private Banking?

Private Banking means personalised financial and banking services to the high net worth individuals. Usually, HNIs are those who own a business, acquire more wealth and therefore, require the private banking services with access to alternative investments. As such, private banks act as mediators and offer their assistance to such individuals regarding their investments. 

Priority banking includes exclusive investment-related advice, protecting, and growing assets in the present, offering specialised financing solutions, planning retirement, and passing wealth on to future generations. 

Benefits: 

• Privacy: The services offered via privilege banking are highly confidential between the institution and the consumer. Their approach is exclusive to their customers so that the competitors do not lure a potential client with a similar solution. 

• Customised services: Prominent banks make sure that HNIs receive tailor-made services based on the assets they hold. An account or relationship manager gets assigned to each who allows accessing mid-level upper management directly. This easy access minimises any obstacles for offering inputs regarding wealth management decisions, and the bank can strategise the decisions according to the client's financial decisions. 

• Incentives: HNIs are the main clientele for banks, solely because of the substantial assets they bring to the institution. They get rewarded with special private banking services like tax preparation and planning, traveller's cheques, or corporate checking at discounted rates. 

• High returns: Most of the HNIs receive higher returns from their investments that outperform the market. 

Challenges: 

• Regulatory restrictions: Regulations in India are not equipped to deal with the kind of products and services that private banks sell. Few investments are not regulated by an authority making it difficult for the investors to redress their grievances. Only a few have the liberty and control do so yet.
   
• Lack of expertise: Preferred banking requires financial analysts who build strong, lasting and trust-worthy relationships with HNIs. There is a shortage of experience and training. Hence, recruiting, training and retaining qualified professionals is a priority for most banks. Such services target keeping the customers when it should be focusing on teaching the right individuals. 
  
  
• Private Banking in India: Banks like  ICICI Bank, HDFC Bank, Axis Bank, DBS Treasures, and Standard Chartered are India's top private banks in which the majority of investments get undertaken by foreign investors even though management control are with Indians.