Be Wise With Private Banking Services (Part 1)

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In Indonesia, had made headlines in the mass media, regarding the embezzlement of customer funds carried a Senior Relationship Manager (SRM) in one branch of a foreign bank, named Inong Malinda aka Malinda Dee. Unmitigated, 20 billion Rupiahs (equal to 2 million dollars) he had stolen from private banking clients. Since then, the authority of Bank Indonesia imposed a tightening operation private banking services in Indonesia.

Learn from Melinda Dee case, we should be more careful and selective in choosing private banking services offered by banks.

Private banking customers in several large banks are required to have a range of balances on customers priority banking, if priority banking customers required with a minimum of Rp 500 million to Rp 1 billion, while in private banking clients are required to have a range of minimum balance of Rp 5 billion to Rp 10 billion . If the balance is still below the amount that the customer can not be incorporated into the category of private banking.

In terms of quantity, by taking the example of Indonesia, the number of private banking clients are not a lot, a maximum of 0.08 percent of the total number of accounts banks in Indonesia. However, if calculated from the total assets of the entire private banking clients can reach over 36 percent of the nominal value of fund assets (deposits) are deposited in banks in Indonesia.

Then why the case has become a scandal? Of course, this is not apart from the value of money managed by a collapse in the SRM on the foreign bank.

The simplest question is why the fund is successfully embezzlement? What is wrong from a trust mechanism super-rich clients to the bank? And can it be avoided? Let us refer to.

As described above, private banking customers is the highest group of some classes of customers in banking, then in accordance with this client group name to get a very personal service, personal service covers all areas that are also true outside the main business of banking itself, that is collected or raise funding (funding) and channel funds into the real sector in the form of credit (lending).

In the group of this customers, many large funds that are only played on  investment instruments in the financial sector,though the investment is the authority of an Investment Manager. So the banks get fees from transactions and investments made or approved by the client, until here is fine, but this is where lies the problem.

If we speak of investment it will certainly not escape the expectations of the customer to get a return, while the return is closely associated with the risk, well herein lies the fundamental base of a close relationship between the customer with a Relationship Manager (RM). The customers do not want their funds to be reduced even otherwise hope to obtain a high yield at least be in the range above the average deposit rate.

While the RM will also do everything possible to satisfy customer desires. At this point the customer is often given the advice of the RM in order to sell or add to divert existing funds to achieve the optimal rate of return in accordance with the financial products that can be transacted by the bank concerned.

Prompts are certainly equipped with treats historical data and the development of macro and micro economic conditions. Technical advice or input if it is approved by the client will proceed with filling out the required fields, of the form must be signed at least by the customer, then the RM only continue the form to the operations department, and by the operations department, the customer will be re-checking on the orders that have signed the form. And so on, in short on funds execution was carried out in accordance with instructions on the form after a confirmed course. (Private Banking... To be continued)