For a retail bank you walk in with an identity card and proof of address, bung that on the desk and say “Open me an account please and don’t give me any of that ‘computer says no’ stuff!” (see video below)
The lady behind the counter might ask you a little bit about you income and what debit/credit cards you want while secretly checking your credit worthiness. But that's the extent of it.
Then she’ll print out a bunch of papers, say “Sign there!”, pass you a keychain with the bank's logo on it and send you on your merry way. Simple as that: Bish, bash bosh, you are a new customer and it isn’t even time for brunch yet.
With private banking it’s a completely different ball game.
Private banks get a lot of stick for apparently hiding the money for some unsavory fellows on a global scale. The truth is that for an industry which is living proof that dinosaurs are not yet extinct, when it comes to compliance, private banking is right at the cutting edge and years ahead of everyone else. What is done in private banking compliance now, is coming to a high street near you, very soon.
In private banking the account opening process is split between the relationship manager (aka private banker) and those who make the decision to approve the opening of an account. The people who give the approval differ from bank to bank, but in general it involves senior compliance officers and management. Usually (again, this differs from bank to bank) they meet regularly in the form of an account opening committee. So getting an account open in a private bank is at best a process calculated in days rather than seconds. (Although I’m pretty sure if the Queen of England wanted to open an account then they might hold an extraordinary meeting of the account opening committee.)
The main point to take from this is that the gathering of information from the prospective client is the duty of the banker or the bank’s sales person. They carry out the Know Your Client (KYC), risk profiling and due diligence on the prospect and get the necessary paperwork signed. This is then passed on to the account opening committee who will either:
- Approve the account opening
- Ask further questions from the banker
- Demand that the banker collect additional clarifying information from the prospect.
The idea behind all this is to separate the client facing individual from the account opening decision. Those who approve the account do not come face-to-face with the client. This is a smart form of checks and balances.
Compliance officers “Live in the Land of No” as Brett King put it so well in his fabulous book Bank 3.0, and therefore have a tendency to scrutinise each and every account opening application with extreme prejudice. So contrary to what many would like to believe, the process of opening an account in a private bank is not a walk through process at all.
If you put yourself in the banker’s Armani shoes, more than anything else, he will want the client's business. Even though us private bankers possess a will of steel, a back bone of iron and ethics of such high standing that they would move the Dalai Lama to weep tears of joy, it is not unreasonable to expect some form of positive “spin” and emotional alliance from the the banker towards the client. This is as it should be; the banker’s duty is to serve the client. So it makes perfect sense to kick the banker out of the final decision making process.
While private banks get much criticism for what they do, they do deserve recognition for being the world leader when it comes to best practices in KYC and due diligence for private individuals.