Personal banking focuses its activity on the provision of financial services to clients with medium-high incomes, aimed at managing their long-term assets.
It is a segment of banking specialized in serving clients with high net worth. However, without reaching the levels of private banking (where assets are even higher).
In other words, personal banking offers personalized service to customers. For this, there is a figure of a personal manager, the use of personalized communication channels (personal phone, message alert service to mobile phone, specific website on the Internet, etc.) and integrated bank statements.
Characteristics of personal banking
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 (typical of financial markets).
- Personal attention: This type of personal banking customer 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, formation and monitoring of bond, equity, derivative portfolios, etc.) or more standardized (for example, monitoring of portfolios of investment funds).
- Risk diversification: Not to earn more, but to risk less.
- Taxation: To achieve optimization of the fiscal financial profitability of the patrimony.
Factors that drove personal banking
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:
- Socialization of wealth: Before, private banking services were aimed at a very limited population segment, while with this modality of personal banking it has covered that segment of middle income, 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 at lower income levels.
- Investment funds: In the last 20 years, Collective Investment Institutions (IIC) have made it possible to bring finance closer to all kinds of public.
- Population pyramid: Reflects a progressive increase in the longevity of the population. In developed countries an aging population is taking place.
Evolution of the population pyramid in Spain
All this, coupled with the fact that the social security financial system is pay-as-you-go (that is, the money that comes in each month, through social contributions, is used 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 income level, where the public pension represents a low percentage of their last income from work. It leads us to think that the private complementary systems will be able to make up, in part, the shortcomings of the public pension system, as is already the case in other Western countries.
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