In most countries, the banking sector is largely controlled by the government. Although the private sector normally has a stake, a bigger percentage is owned and controlled by the government. The main reason for this is security purposes so that there is a slim chance of the sector going down. Leaving the control of the banking sector could be risky since any form of mismanagement could result to a collapse of the sector. However, on the flip side, there are several advantages associated with private banks. Some of the benefits have been discussed in this paper.
Unlike the traditional banking offered by the government, private banking goes beyond the usual. It not only focuses on investment advice but also tackles management of investments while looking at the financial situation of each client. Private banks have come up with custom made packages that will suit each client depending on their needs and financial ability. Some of the services available with the private banks include protection an asset growth specialized solutions in the financing sector, and retirement plans. Bankers in the private sector normally work very closely with their clients in order to establish the investment goals or the specific needs of their clients. This close interaction is not possible with the public sector owing to the huge number of clients.
Parent Brand Approach
Private banks have a definition of value proposition based on two main dimensions. One of the dimensions is the use of the parent brand. The use of parent brand is mainly to gain confidence and trust from clients. Normally, the private banks have presence in various parts of the world where they introduce offers which are associated with the parent company.
The One Bank Approach involves private banks give an offer that is integrated to clients with the aim of meeting both their personal and business needs. With that kind of concern, the private banks have a better understanding of the risks of their clients as well as the nature of risks involved. The private banks also go an extra mile to ensure that they come up with tailor-made solutions that caters specifically for the needs of each client.
Majority of private banks opt to follow the platform of open product and therefore argue that their advice is impartial and unbiased. According to the open product platform, private banks make their case that there is no incentive that push the proprietary products making the clients will always get the very best of what was offered by the banks. This approach works best to ensure that customers receive the best services and have a wide selection of choices.
High Reward Space
The legal restrictions of private banks are less compared to those of the public. A huge part of accounts in private banks normally have the exemption of FDIC insurance. On one hand, this is risky because investors could lose everything in case of mismanagement of portfolio. On the other hand, this provides high gains financially for investors leadings to great rewards for the clients.
There are multiple advantages of banking with the private sector. Although there are challenges and risks involved with the private sectors, the benefits outweigh the risks. Customers are better placed to earn high rewards when banking with private banks.