Certain wealth managers pride themselves on being the best in the world, but the world's best private banker is a Spaniard who is imbibing the «Netflix model» into the industry.

Some bankers are obsessed with Netflix, the American streaming service. The latter is considered a pioneer in the use of intelligent algorithms, which decide for the customer which series or movie he should watch. Netflix collects further information and data with each new customer login on its video platform in order to be able to tailor its streaming service completely to each individual customer request.

Netflix's business model, with tiered pricing for basic, standard, and premium monthly subscriptions, is also exactly what private banks suffering from margin pressure want: Predictable revenue streams from each individual customer.

CaixaBank? Transformation Accomplished

Intelligent algorithms are already being used by some Swiss banks to suggest products, investment ideas, or services to customers. But perhaps the best job in this respect is being done by a Spanish bank: CaixaBank, which is headquartered in Barcelona and has 73 billion euros in assets under management. Its head of private banking, Victor Allende, has enjoyed an excellent international reputation for years.

He has succeeded in transforming asset management, based on a sophisticated technological platform on the one hand and 600 advisory and investment specialists from the Caixa network on the other. Allende has consistently focused the business model on fixed fees, which takes into account eight different customer groups and their demands and services.

Algorithm That Determines the Relationship

Hybrid advisory model or Netflix: Allende is a pioneer of digital private banking, in which an algorithm predefines the potential relationship between adviser and client, from which offers emerge and revenues flow. The client can choose the depth of the relationship with the adviser and pays accordingly for exactly what they want.

The transformation of CaixaBank started in 2015 by necessity. A number of acquisitions had to be integrated. A new IT platform was needed, which would allow clients to move from an execution-only model to a discretionary fee model.

In this regard, Allende did the best job of any private banking manager – at least in the eyes of the judges of the PWM/The Banker Awards (belonging to the British newspaper «Financial Times»), who awarded him the title of «Best Leader in Private Banking» for 2020.

Paying When it Adds Value

I remember when they used to say that Spaniards don't pay for banking advice. That's nonsense – everyone likes to pay for something they think adds value, Allende told «The Banker».

The Netflix and fee model has been making the rounds in the banking advisory industry for several years. Consultants at Aite Group found last year in a survey of U.S. bank clients that, particularly in the affluent sector, willingness to pay for advice is high among «millennial» clients, as long as price and performance remain transparent.

Proper Implementation

Allende, who formerly worked for Morgan Stanley in Spain, does not claim the success of this transformation for himself. We didn't invent anything, he told news site «PWM». He just traveled around a bit to see how other banks were already doing it and then copied that, he said.

The difference, he said, is CaixaBank has gone further than other institutions in putting together best practices. And more importantly, we implemented them with conviction, Allende added.