Dina Matvejeva, Head of Luminor Private Banking

Dina Matvejeva, Head of Luminor Private Banking

As the country’s economy and technology evolve, and people become more educated about finance, the field of Private Banking is also changing. Over the last 15 years, the profile and needs of customers have changed, as has the range of services offered. Customers are increasingly younger, are much more familiar with financial markets and demand faster and more flexible solutions.

Wealthy Thirty-Year-Olds

In the past, most of the customers were entrepreneurs involved in real estate transactions. Customers had to be educated, explaining what financial markets are, why they should invest, what the risks are and why the result should be evaluated in the long term. Until recently, the average age of a Private Banking customer was around 55 years, now it has dropped by about 10 years. Wealthy 30-year-olds, working mainly in the IT field, have appeared among the customers, and their needs and level of knowledge have completely changed. This requires private bankers to keep abreast of the latest solutions and offers not only in Latvia, but also globally.

Customers Demand Fast, Flexible Solutions

The pandemic made people accustomed to choosing remote services more often. Before the pandemic, Private Banking customers were relatively conservative and mainly opted for face-to-face visits, but the situation has changed significantly. Customers are demanding much faster and more flexible solutions, in which they can be much more involved. This means that various digital solutions are becoming more and more relevant, where the private banker plays a more advisory role, while the customers themselves can take action and make decisions. Now, customers have access to many sources of information and enjoy discussing the economic situation and investment options with their private banker, offering their own version, which is a mutually very interesting and educational process.

Younger customers are also much less likely to use the concierge service, as many services such as booking plane or concert tickets have become much easier and younger generations can do it themselves. The objective of this service is often no longer to book exclusive tickets, but a much more challenging one – to obtain tickets, invitations or services that are no longer available on the market.

Customers Keep Their Money Close

However, there are things that remain the same. One of the main objectives of all Private Banking customers is to maximise the return on their investments. Although investment in real estate has historically been higher, interest remains high as customers still believe that at least part of their savings should be invested in real estate. Similarly, the interest in investing in investment markets has remained steady and even increased over the last 10 years, but interest in types of investments varies depending on the situation in the economy and financial markets. For example, there is now an increased customer interest in investing in bonds due to the volatile global economic situation and the increase in central bank interest rates, as yields for this investment asset class have risen. This is particularly the case in the government bond segment, as this type of investment carries lower risks. People are also interested in deposits, as the increase in central bank rates has caused deposit rates to rise. Investing in sustainable companies and funds is also becoming more and more relevant.

Despite the fact that financial services have become much more accessible and especially the younger generation with good IT skills can place money anywhere, finance is still a very sensitive topic and customers still choose to deposit most of their money in their country of residence to ensure that it is more easily accessible.

Human Contact vs Digital Solutions

Invariably, our task is to help separate feelings and emotions from rational financial decisions, because the human factor is still very important, something that digital services cannot offer. We observe that customers often want someone to discuss a particular situation with or to calm them down, especially when financial markets are volatile. Therefore, despite the development of digital services, one of the objectives of Private Banking will remain to maintain a strong and trusting relationship with its customers.

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