how to choose a bank

How to choose a banking partner

Updated on May 2, 2023

Illustrator: Adrián A. Astorgano

Table of Contents

  1. Cutting out the middle-man
  2. Banks still play an important role
  3. Three core considerations when selecting a banking partner
  4. Regulations impacting the banking space: AML and KYC
  5. What modern family offices want from their banking providers
  6. Types of banks

The popularisation of the family office has caused an outflow of assets from the private banking space. However, banks have responded by significantly improving their family office service offering and are becoming more customer-centric in their approach. When choosing a banking partner, the key is to strike the right balance between the capabilities that are employed in the family office and the offerings that are sourced from your bank.

Cutting out the middle-man

Prior to the popularisation of the family office, it was standard practice for ultra-high net worth individuals and families to utilise private and investment banks for the custody of family assets and investment advice. However, the growth of the family office sector has resulted in a significant outflow of family assets from the banking space. This has forced institutions to revise their strategies and service offerings in an attempt to remain relevant to family offices. The redirection of assets is primarily driven by the in-sourcing of capabilities, such as strategic asset allocation, risk management, financial accounting and reporting within the family office structure. The growing importance of philanthropy, effective succession planning and a shift towards direct private equity deals has also highlighted the need for a more specialised approach to servicing the modern family office. Banks have heeded this call and many have now restructured and evolved themselves to become more relationship-driven, offering tailored family office services that are far more differentiated and personalised.

Banks still play an important role

Although the relationship between wealthy families and the banking sector has shifted in recent years, there is still a reliance on banks for a wide range of services.

Modern bank offerings will commonly include custody and lending, access to direct deals and IPOs, corporate fiduciary services and transactional bank accounts. However, servicing family offices requires banks to go above and beyond their normal scope which is why many are now offering bespoke bill-paying services, consolidated reporting, record keeping and facilitating asset sales and acquisitions. Generally, the services offered to a wealthy family office will be customised according to their needs and will be limited only by the capabilities of the banking partner.

Family offices are all unique in terms of their requirements, so due diligence is required on the part of the family office to ensure that their specific requirements are clearly outlined and that the right questions are asked of a potential banking provider.

Three core considerations when selecting a banking partner

The specific services that a family office needs from a banking provider will be determined largely by its internal management capacity and the complexity of its asset structure. As a primary step in the bank selection process, a bank’s core competencies should then be reviewed.

Internal management capacity

Robust family offices normally take responsibility for many operational and strategic areas including financial management, investment management, strategic planning, administrative support and advisory services. Within each of these operational areas, there are many sub-sets and it is important to detail what responsibilities and services remain in-house or need to be outsourced.

Asset structure

The complexity of a family office’s asset structure has a direct impact on the breadth and depth of banking services required. An established family office that has built a diverse portfolio of investments across different asset classes and geographies will have different service requirements for a family that has suddenly come into serious wealth.

Core competencies of banking provider

During the initial evaluation of banking providers, the tough questions need to be asked upfront to avoid issues down the line. At the very least, a bank needs to demonstrate a successful track record in servicing family offices and should have a dedicated family office team with the required skills and credentials. It is also important to understand what functions are in-house versus external. Performance checks and a review of AUM trends can also be helpful. Other core competencies to evaluate could include a bank’s risk-management processes, reputational scores relating to customer service levels and transparency, as well as a bank’s digital infrastructure and global reach.

Regulations impacting the banking space: AML and KYC

Within the financial services sector, customer screening and the prevention of illicit activity have been deemed vital to the security of businesses, customers and nations as a whole.

AML or Anti-money Laundering refers to the mandatory steps financial institutions must take to prevent criminals from depositing or transferring funds that come from illicit activity. The primary intent of AML regulations is to prevent terrorist financing and organized crime.

KYC or Know Your Customer refers to the checks that a company has to perform to confirm the identity of a customer. The intent of this regulation is to ensure that clients who potentially pose a risk to a business are either prevented from doing so, or easily identified. KYC regulation is intended to support the overarching intent of AML.

As regulation becomes more strict everyone should be prepared for any KYC & AML processes that the bank might need. This is also relevant for investments, for example when investing into funds. Being prepared for this process will ensure that eventual onboarding with a specific bank can run a lot smoother.

The bank strikes back

When it comes to investing, many family offices see banks as unnecessary intermediaries and are choosing to employ specialist advisors who identify and facilitate direct investment opportunities that are aligned with the family’s long-term agenda. However, banks are responding by investing heavily behind personalised family office services and, in some cases, offer superior expertise within the asset management space. Therefore, an open mind is required when evaluating the capabilities within the family office space versus what is available from banking partners.

What modern family offices want from their banking providers

Simply put, modern family offices want a banking provider that is willing to understand their unique needs and vision and is able to align their service offering to meet those needs. Below are some core service requirements that modern family offices are looking for:

bank family office

A customer-centric approach

Every family office is unique, driven by different priorities and values and confronted by different challenges. For banks to have any relevance to wealthy families or family offices, a personal relationship needs to be built and a personalised approach needs to be taken across all aspects of the business relationship. A key reason for the outflow of assets from the banking sector is the perception that banks are more focused on finding clients for their products than finding the right products for their clients. For family offices with a specific investment agenda or an alternative focus on impact investing or direct private equity deals, a bank would need to demonstrate its commitment and capability to customise its offerings. However, customer-centricity pertains not only to investments. Softer issues, like succession planning and wealth transfer may be a high priority to a family office and a banking partner who can understand, advise and support the family office with these challenges should have a distinct advantage.

bank family office

A partner for the long-term

Most family offices are set up with the intent of preserving wealth across generations. This requires a different approach to investing and risk management. It also means that succession planning, estate planning and trust and fiduciary services become important themes of discussion when engaging potential banking partners. Family offices, by their very nature, are geared towards long-term sustainability and, with that intent, comes a greater focus on legacy and purpose. A banking partner should be willing and able to embrace and support the family’s long-term vision.

bank family office


The financial crisis was one of the key triggers for wealthy families to establish family offices and take control of their investment portfolios. Risk management processes, asset management and administration fees, incentive structures as well as investment performance all came under heavy scrutiny, significantly impacting the private banking sector. Family offices now demand far more transparency from their banking partners. They want to know what they are investing in and they want full transparency when it comes to the costs and risks involved.

bank family office


Strategic borrowing has become an important component of family office financial plans. Anticipating liquidity needs and being able to effectively deploy leverage is a vital requirement of a banking partner. It also helps family offices to minimize the tax implications that come with the liquidation of assets. Of course, competitive loan rates would then be a priority for a family office when assessing banking suitors.

bank family office

Advanced technology

Family offices are increasingly looking to partner with banking firms that employ new technologies, allowing for remote client service and enabling clients to manage their accounts using any channel, whenever they want. More sophisticated family offices have an expectation that wealth managers are investing in advanced analytics to improve their competitiveness and overall performance. Data security is also high on the priority list for family offices so robust cyber-security is very important.

Types of banks


How do family offices choose a bank?

Prior to choosing a bank, family offices have to carefully compare their expectations with the bank's core competencies. Investment strategies, expertise in asset management or personalisation should be considered.

What do family offices expect from banks?

Due to their specific needs, family offices require a customer-centric approach, long-term partner, transparency, leverage and advanced technology to sustainably manage different assets of their wealth.

What are the 5 types of banks?

Family offices can choose from different bank types based on their needs and asset structures: retail bank, commercial bank, investment bank, private bank, and neobank.
Further Reading
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