- Thursday, 02 May 2013 | Tim Stewart
The Basel III reforms are likely to see banks place a premium on ‘sticky’ customers with multiple products – which will have ramifications for the way planners run their businesses.
ING DIRECT’s executive director for distribution, Lisa Claes, said the upshot of the Basel III reforms is likely to be that banks will have to increasingly match their assets with their liabilities, like for like.
“The days of borrowing short and lending long are numbered,” Ms Claes said. “This means banks will be required to hold more capital for the same level of banking business than they have in the past.”
With a larger amount of liquid assets on their balance sheets, banks will value ‘sticky’ customers more because they will provide a higher ‘liquidity benefit’, according to Ms Claes.
“Put simply, an unbreakable term deposit will receive a higher liquidity benefit than ‘at call’ savings,” she said.
So what are the practical consequences for intermediaries like financial planners and brokers?
Banks will price longer dated savings (such as unbreakable term deposits) more favourably than ‘at call’ savings, Ms Claes said.
“Banks will [also] bundle products or offer discounts for additional products which will lead to improvements in the onboarding processes, and the universal application form may proliferate,” she said.
Intermediaries are also likely to be in competition with each other to broaden financial solutions to customers.
“Banks, in an effort to attract distributors competent in this regard, will undoubtedly offer unique rewards for those with proven ability to attract the one customer for many products,” she said.
Finally, ‘consumer propensity models’, which predict at what stage of a customer’s lifecycle – or relationship with an institution – they are most likely to buy products will become “even more critical”, Ms Claes said.
Latest from InvestorWeekly
- ASFA backs 'MyPension' concept
- Link Group set to purchase Superpartners
- Post-trade security JV launched
- Nikko AM restructures multi-asset teams
- First State Super adds MSCI platform
- Henderson launches fixed interest fund
- Asset managers facing operational pressures
- Perpetual expands trustee services in Singapore
- Christian super funds merge
- Funds management mergers tipped to continue
- Creating super fund alpha
- Retirement income innovation must be inclusive
- Weighing up default fund insurance
- Don’t neglect developed markets
- Hunting for ‘preferred infrastructure’
- Westfield: a failure of engagement
- Can Europe avoid Japan’s fate?
- Cleaning up with clean technology
- Obsession with fees hurting retirees
- Do we need independent directors?
- CFSGAM expands Aussie equity team
- Lifeplan appoints national BDM
- Cuscal appoints CFO
- Bravura expands strategy director’s role
- Sunsuper expands investment team
- BNP Paribas appoints head of Hong Kong
- AUSCOAL Super appoints CFO
- Towers Watson names global manager research head
- ICG appoints managing director
- Former Treasury adviser to join ASFA