Salem Five’s Foray into Private Banking
Salem Five, a Massachusetts-based community bank, is taking a bold step into the world of private banking. Having earned its name by accepting deposits as small as a nickel over a century ago, the bank is now focusing on expanding its services to cater to the high-net-worth segment. While the bank hasn’t specified any targets, the executive team is optimistic about the prospect, open to expanding the operation if it proves successful in the upcoming year. source
Proof of Concept Initiative
Joseph Riley, the Executive Vice President of Salem Five, describes the bank’s new venture into private banking as a “proof of concept” initiative. The bank, which has assets worth $8.4 billion, has recently hired an experienced private banker and has plans to add more to the team shortly. Riley is confident about the venture’s success, stating, “If we prove the concept over the next year, and it is a successful endeavor … then good for us and we will move forward in the way you often do when you have a successful proof-of-concept initiative.”
Joseph Riley, Salem Five Executive Vice President
First Private Banker Onboard
The bank’s first private banker, Veronica Caira, brings extensive experience to the table, having spent seven years at the $25 billion-asset Independent Bank Corp. Caira, who began her banking career in Rome, Italy, expressed her enthusiasm about the new role. “I’m really looking forward to working alongside … the team at Salem Five,” she said. “The bank has a great reputation in the market and together I know we can build upon that even further with the addition of private banking for the important high-net worth segment.”
Veronica Caira, Salem Five’s first private banker
Private Banking vs Wealth Management
While Salem Five has an existing wealth management business, its venture into private banking signifies a shift towards dealing with larger assets and providing a higher level of service. According to Don Sondhelm, CEO of Sondhelm Partners, a wealth management consulting firm, customers with assets exceeding $5 million typically qualify for private banking. Private banking also includes concierge services, assisting clients with nonfinancial tasks, thereby offering a more personalized and sophisticated service.
Private Banking: A Lucrative Endeavor
Private banking has wide profit margins and the potential to build a stream of regular, nontransactional fee income. This shift from transactions to recurring income is a significant attraction for banks. Salem Five’s strategy is to leverage superior service quality to secure sales and establish trust with customers. Riley emphasizes, “When you’ve committed that you would do something, you do it exactly in accordance to what your commitment is. When you do that, you become very valuable to individuals.”
Need for a Corporate-Wide Initiative
Riley underlined that the success of the private banking venture would require the full cooperation of all the business lines and support areas within the bank. The role of the private banker is to facilitate a rapid and effortless response to a client’s needs, making the entire process as easy as possible. With this approach, Salem Five is ready to compete in the private banking space, providing top-notch service to high-value customers.
