Conceirge services in us banking industry

Concierge Services in US Banking Industry

February 2014

Concierge Services in US Banking Industry Overview In the midst of hectic schedules and tight working hours, people are looking for professionals who can assist them with their tasks so that they can concentrate on high priority issues. Concierge services cater to this need of every professional or personal, and are provided by experienced individuals/organizations that assure complete dependability and security of getting a work done.

Concierge services are premium personalized services provided to affluent and wealthy individuals and corporate. They include services such as travel assist; restaurant bookings; ticket bookings for various events such as opera, concerts, and sporting events; gift referrals and many more.

In case of banks, to avail any information or assistance, customers have to call various contact numbers and usually have to spend a great amount of time on hold, or being transferred from one customer service executive to another. A concierge service rescues them from these hassles and offers a streamlined customer experience, boosting customer retention for banks.

Customer retention is a high priority for the US banking industry, and the task of retaining customers has become very challenging due to the global economic meltdown in 2008. Affluent and wealthy customers are the major constant income providers for banks; to retain such customers banks are providing concierge services. In the US, not only big banks are providing such services but even small banks and credit unions have rolled out concierge services to retain customers.

Concierge Service Market The worldwide concierge service market is pegged at $1.5 Bn, and the US dominates it with a 60% share.

But in future the market will be driven mainly by developing countries where indispensible income is increasing.

The market is expected to grow significantly in the next few years, due to improving per capita disposable income, particularly among households earning more than $100,000 annually.

Concierge in the Banking Industry Increased regulation, changing consumer dynamics, and technology have jointly reduced the pool of profitable customers, requiring banks to come out with creative ways to find customers who provide a constant source of income. ‘Mass affluent’ customers are one of the demographics that offer banks an enduring opportunity for growth, given their need for higher-margin products that go beyond traditional banking services.

In the US, mass affluent customers are the people with liquid investable assets ranging from $250,000 to $1 Mn, representing more than $7.5 Tn in assets. Mass affluent customers are typically six to 10 times more profitable than mass market customers. They also generate 60% to 70% of total customer profits for retail banks even though they make up only 20% to 30% of banks’ customer base. Losing mass

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affluent customers cost banks much higher than low income customers. Banks in the US are focusing on this section of customers to generate constant revenues.

Affluent customers usually insist on premium and customized services and expert advice. They want personal banking relationships, and not just the convenience of digital channels. To cater to this affluent and wealthy segment, banks need to redefine their banking services – concierge services are upcoming personalized and customized services provided by banks.

Bank concierge services are premium services provided to high net worth individuals, corporate which not only handles the ordinary banking needs but also extraordinary needs. Banks are providing 24/7 concierge services to help customers in arranging a trip or booking a table at an exclusive restaurant or booking tickets for concerts.

Big Banks Offering Concierge Services Big banks such as Bank of America, JP Morgan Chase and Royal Bank of Scotland (RBS) are providing 24/7 concierge services to its affluent customers. They also provide a dedicated personal banker to help customers manage their financial needs, advice customers on waived fees, competitive rates, and special mortgage or credit benefits.

To provide enhanced concierge services, banks have tied up with third party concierge service providers.

Bank of America (BofA) has tied up with Les Concierges, Inc., a US-based concierge service provider, to provide personalized 24/7 concierge services. The concierge services offered by BofA are 

Travel assistance: Assist with car, limo, and plane bookings, country profiles, cultural information, and even emergency translators

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Fine dining: Assist in securing the perfect table at exclusive restaurants around the world

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Entertainment: Helps customers secure tickets for the theater, opera, ballet, concerts, and sporting events

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Gift referrals: Recommending and securing a special gift for any occasion

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Leisure referrals: Provides information and help about golf courses, tee-time reservations, resorts, boat charters, and more

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Exceptional offers: Arrange and fulfill customers’ chosen adventure

Small Banks and Credit Unions offering Concierge Services Apart from large banks, small banks and credit unions have also started offering concierge services to its customers. The breadth of the services provided by them is comparatively small but includes premium services such as home visits by private banker, scheduled branch visits, customized offers, premium customer service, and offering separate lounges.

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Few banks and credit unions such as First Tennessee Bank, Alamo Federal Credit Union, and Texas Trust Credit Union have rolled out concierge services at their centers as part of hassle-free customized services. The concierge services align with the strategy of small banks and credit unions, with small base, to provide personal banking services.

First Tennessee Bank First Tennessee Bank is a Memphis, TN-based bank providing diversified financial services for consumers, businesses, financial institutions, and governments in Tennessee. It is a subsidiary of First Horizon National Corporation.

In 2013, Tennessee Bank launched concierge services at three locations around the Tennessee state to enhance in-person banking experience.

In a typical bank branch when a customer walks in, he has to go to various desks, and asks various people to get his job done, which is a lengthy and time-consuming process. To provide better customer service and reduce customer’s time, the bank has built concierge service centers at three locations – the Macon Road branch in Cordova and at branches in Knoxville and Murfreesboro.

In the concierge center, a customer is greeted at the door by an executive who will be with the customer throughout his interaction that day. The executive will walk through the customer at different desks to help him with his needs. After the customer’s job is done, the same executive will walk the customer back to the door.

Tennessee is offering concierge banking services for wealthy clients, real estate developers and commercial clients.

“We wanted to find a more efficient, effective way to meet our customers’ needs when they do decide to come into a financial center, with the primary focus of providing not just the same level of customer experience but an elevated customer experience.”

– Kevin Karrels, Retail segment Leader for First Tennessee John Castle, Chief Executive of Southern Michigan Alamo Federal Credit Union Alamo Federal Credit Union (Alamo FCU), founded in 1930, is a San Antonio, Texas-based bank credit union with an asset of USD42 Mn and membership over 6,613.

In 2013, Alamo FCU introduced concierge banking services to people of San Antonio to provide anytime and anywhere banking, targeting its busy customers. The credit union’s personal concierge officer will meet customers at their office, home or another convenient place such as coffee shops and restaurants to provide premium services. The concierge officer will help customers open accounts, take and complete loan applications, assist with switching from their current bank or set up automatic bill pay or mobile services.

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The concierge banking is available to Alamo FCU’s all prospective and current members.

“Most banks have invested heavily in expensive headquarters and facilities with their customers’ money. Alamo FCU is investing in superior service and dividends for really busy people, this is something that the busy professionals of San Antonio have been wanting for a long time. A way to make their lives easier without spending hours in a bank waiting on someone. With Alamo FCU, you don’t wait on us, we wait on you.”

– Max Villaronga, President, Alamo Federal Credit Union

Conclusion Banks and financial institutions in the US are struggling to grow in the face of augmented regulation and rising cost pressures. In troubled times, the only segment that can help them stay afloat and offer growth opportunities is mass affluent customers; hence banks are pulling out all the stops to lure this segment for constant source of income.

Concierge service is premium service targeting the mass affluent customer to sell higher-margin products. To attract mass affluent customers, banks are rolling out concierge services to provide premium personal banking services.

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