Private banks intensify battle for wealthy female clients
25th April 2007
By IB Staff Writer
The number of wealthy women is soaring while the wealth gap between men and women is quickly narrowing. As a result, banks have placed considerable effort in various initiatives to attract more women clients. However, a Datamonitor report warns that this 'champagne and chocolate' approach will not work as women are looking for more from their private bank than a spa discount and a pink website.
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Traditionally, wealth has been associated with the male world, but this is changing rapidly. The number of female millionaires in Britain has been rising steadily for many years on the back of social trends, most notably inheritance and the fast-climbing divorce rate. However, the emergence of a new generation of women indicates that many are starting to prosper in their own right, with female entrepreneurs increasingly growing in number.
In 2005, there were more high net worth women in the UK than men; with 448,100 high net worth women, and 429,300 wealthy men recorded. Together, they held GBP235.5 billion in onshore liquid assets, of which 3,800 women owned liquid assets of over GBP5 million. Currently, women make up around 46% of Britain's 376,000 millionaires, although this number appears to be growing by almost 11% annually.
Wealth gap narrowing rapidly
The wealth gap between relative wealth levels still exists but is rapidly closing. In 1998, the average male millionaire was worth GBP2.7 million, while the female equivalent owned GBP1.3 million, representing a gap of 112%. However, by 2006, the average man with a million is worth nearly GBP3 million, while a female millionaire is worth close to GBP2 million. The gap has fallen by 30.8% to GBP993,805. Therefore, between 1998 and 2006, a male millionaire's average wealth increased by 9.1%, while the average worth of a female millionaire grew by 54%.
Banks attempt to woo female clients
High street banks and private banks alike are turning to innovative, client-centric methods to attract new clients, and this approach is most transparent in the race to attract female clients. More than ever before, banks are investing in events, products, and services to catch and retain valuable female clients, and competition is becoming stiffer as the market develops.
Most high street banks have launched services and programs to attract and support female clientele, while private and investment banks have pursued different strategies. Some are beginning to provide some form of networking event or women's resource such as a website or a newsletter, while others, such as Citigroup Private Bank in the US have gone as far as launching a service aimed specifically at women. However, many UK banks have yet to make a move in this area and, while many private banks and wealth management divisions say that they recognize the market significance of the wealthy woman, only a few appear to have taken direct action.
A gap to fill
This gap in the market has led to a number of new firms attempting to tap into this niche market. Companies such as Independent Woman in Scotland, and Bramdean in the UK have focused their business proposition entirely on servicing the female client.
Some female-focused offerings have been extremely successful, although many private bankers still have reservations about their effectiveness. In the UK, the majority of female-focused offerings have been based around issues assumed to be relevant to women, and designed in a style thought to be appealing to the female eye.
This frequently means a focus on the more frivolous side of things; what can be defined as the 'champagne and chocolate approach,' which can be insulting to intelligent, sophisticated women who are looking for more from their private bank than a spa discount and a pink website. It appears as though banks are adding value hinges instead of trying to understand their needs - both day to day and long-term - and providing relationship managers who can relate and speak their language.
Unfortunately, many banks don't yet have a specific budget to research the segment, so instead are having to focus on tactics rather than long-term goals. This lack of strategic thought is resulting in opportunities being missed, and leaves a potential gap in the market. 'End Intelliext
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