Personal banking focuses its activity on providing financial services to clients with medium-high incomes, aimed at managing their long-term assets.
It is a segment of the bank specialized in serving clients with high assets but without reaching the levels of private banking (where the assets are even higher).
Basically, personal banking offers a personalized service to customers, where there is a figure of a personal manager , the use of personalized communication channels (personal phone, message alert service to mobile phone, specific web page on the Internet, etc. ) and integrated bank statements .
The main characteristics that define personal banking are:
- Neutrality:the financial advisor must be cautious in his judgments, and not be influenced by personal or circumstantial motivations (proper in financial markets ).
- Personal attention:this type of personal banking client, seeks a more exclusive treatment.
- Discretionary or non-discretionary management:depending on the type of service you wish to receive, which may be more dedicated (for example, training and monitoring of bond , stock , derivative , etc.) portfolios or more standardized (for example, monitoring of portfolio of investment funds ).
- Diversification of risk:not to earn more, but to risk less.
- Taxation:to achieve optimization of the fiscal financial profitability of equity.
The evolution of this sector has been very notable in Spain since the mid-1990s. There are several factors that have influenced the demand for these services:
- Sociabilization of wealth: previously private banking services were aimed at a very limited population segment, while with this modality of personal banking it has covered that middle income segment, thanks to the knowledge acquired in private banking and technological advances have allowed take advantage of economies of scale and be able to extend services to lower income levels.
- Investment funds:in the last 20 years, the Collective Investment Institutions (IIC), have allowed the approach of finances to all kinds of public.
- Population pyramid:reflects a progressive increase in the longevity of the population. In the developed countries there is an aging population.
Evolution of the population pyramid in Spain
source: INE
All this, together with the social security financial system is shared (that is, the money that enters each month, through social contributions, goes to pay pensions). Also considering the solidarity of the system, the public pension is capped at a maximum, which contrasts with the existence of a population segment with a higher level of income, where the public pension represents a low percentage of its last income from work. It leads us to think that private supplementary systems will be able to replace, in part, the deficiencies of the public pension system, as is the case in other western countries.
