Personal banker services were initially linked to premium (read: expensive) packages and available only to top earners. In the age of the gig economy, this is ripe for a rethink. The market is thankfully responding.
Nedbank’s new “Professional One” account, for example, includes an option to buy into private banking with a bundle fee, rather than linking the service to salary scales. A single account fee here also means access to a “dedicated relationship banker” to navigate lending and investing, and a round-the-clock service team for clients and their families.
3. Perk up
As margins shrink on account fees, banks are increasingly competing in other arenas. Loyalty and reward systems are typical examples, as are some great lifestyle perks. They have to be. Research from US credit scorer FICO shows that millennials have more loyalty to their mobile phones makers, and clothing and shoe brands, than to their banks. Choosing the right set of perks for your lifestyle can mean essentially “earning back” your fees in kind not only through Greenbacks and other spending-related point systems for example, but intrinsic to the banking package itself such as travel perks – when we can travel again, (international lounge access, medical expense coverage, purchase protection, concierge services, spouse benefits) not to mention better rates on your home or vehicle finance.
4. Appetite for alternatives
When you’ve covered clearing debt, saving and low-fee investments for steady growth, you’ve got room to play in alternative investments that speak to your values. How big a slice depends on your attitude to risk, but generally 5%-10% of your portfolio is reasonable. Smart money is the money that works for you – not the other way round.
- Impact investing: Buy into solar energy, beekeeping, and blueberry farming via fedgroup.co.za for returns of between 10% and 16%, and solid green credentials;
- The humble-but-evergreen stokvel has gone digital with franc.app;
- Crowdfarming: Buy living assets like cattle and macadamia trees through livestockwealth.com. No actual farming required – in fact, you don’t even have to leave your house. Ideal!;
- Supporting SMEs: You can buy equity in crowdfunded endeavours at uprise.africa;
- Cryptocurrencies: Some call it “the future”, others “gambling”. Personally, I wouldn’t put anything into crypto that I wasn’t prepared to lose, but I have the risk appetite of an octogenarian. Even more so now, with the downturn and volatility we see in the markets in 2020;
- Art and collectibles: If you have a good eye, and do your homework, there is money to be made in art and collectibles. But these types of investment are quite illiquid, and, frankly, uncertain.
5. Price management and transparency
Simplified fee structures – with a single fixed charge for a basket of services – are increasingly the norm. This is also indicative of the demand that pricing become more transparent, comparable and flexible. Here again, the Professional One offers a 50% youth discount on fees, while over 54s can also get up to 50% discounts on their monthly banking fees by holding investments with Nedbank. Power to the people, indeed.
6. Party of one
Banks crunch the numbers on individual credit risk, and analyse the ebb and flow of funds to upsell a consumer on a specific product. This is sophisticated targeting that works for the bank, but these same analytical tools can work for mutual benefit.
Smart providers will see these emerging trends as an opportunity to pivot to a truly customer-centric business model, not just one that pays lip service to the idea.