Private Banking refers to the
type of premium-level banking that a bank may offer to high
net-worth individuals, a term that refers to wealthy
The term Private Banking is
sometimes used interchangeably with another term, ‘wealth
management’, although this usage often depends on geographical
Unlike the high volume, commoditized retail banking services,
private banking would normally personalize services by tailoring
them specifically for an individual client.
Most often, private banking implies a relationship between the
client and a named ‘personal’ banker who will deal with all of
the client’s banking needs. In some cases the relationship may
also extend to the client’s extended family. A 24 hour service
may be available. Other related services are offered such as
creating trusts, offering tax and investment advice and
providing portfolio management or other asset management
Private banking is normally offered by banks to qualified
customers as a fee-based service.
The computer systems that cater to this type of banking will
reflect the range and level of the services that the bank is
offering. Typically they will allow a bank to offer great
flexibility in establishing banking products and account
options. The range of services and flexibility of reporting will
also be generally superior to those offered by the purely core
banking systems or the retail banking systems.
In the smaller private banks, all of the services may be offered
through a single computer system whereas in the private banking
operations of larger international banking groups specialist
systems from the investment banking and asset management arms
may be combined to offer an integrated service. There is a heavy
reliance by private banks on automated portfolio management
systems that will assist account managers or investment managers
service and administer their customers’ investment portfolios.
Traditionally some of the western European countries were seen
as being the centre of the private banking world, particularly
Switzerland and Luxembourg. Some ‘off-shore’ centers such as
Jersey, Guernsey and Bermuda became popular, particularly with
UK residents, during years of high taxation in the 1960s-1970s.
One of the most significant trends in the industry recently has
been the move from ‘off-shore’ to ‘on-shore’ so today, private
banking can be found in almost every country particularly Hong
Kong, the Middle East and the developed nations.
Back to Top of This