Outline how private banks and wealth management firms segment their Essay

Outline how private banks and wealth management firms segment their clients and outline the new approaches to client segmentation - Essay Example Attempts at segmenting the large number of clientele for institutions like Banks are bound to be laborious and costly. However, the rewards for such efforts are attractive enough to justify these efforts. Very often the segmentation exercises would throw up results that may be surprising and upsetting to the previous assumptions, (Maude, 2006). Segmentation, like a mirror, will show that the actual cost of servicing the highly valuable customers is far less in comparison to the rewards generated, and it will also show the behavioral patterns of those customers, which, in turn, will help to plan and implement balancing strategies that can optimize the results. The recent Global Financial Crisis has brought in its wake a few upheavals in the Banking and Financial Service Industries. The most significant of these is a total re-thinking on Customer service, particularly in the sector of Asset/Wealth Management Advice, where European Banks were, till recently, enjoying an advantage, (Reinartz, Krafft, and Hoyer, 2004). The entry of several new Financial Services Companies into this sector has caused the re-thinking on strategies even though the actual number of Asset Management Clients has expanded recently. In the competition for customers, the existing Client Segmentation has been side stepped and the admission threshold for Asser Management Service has been lowered. The emergence of new High Net Worth Individuals all across Asia and Latin America has added to the stress. The burgeoning new clientele has spurred the creation of many new innovative investment products and services targeting them. European Banks, reluctant to lose the strategic advantage they had enjoyed in the sector, are gearing up to face the competition from new entrants, including Retail Bankers and International Providers, (Landberg, 2001). Consolidation of some European Banks is a distinct possibility in the prevailing conditions. Small Boutique Banks with limited number of High Net