How high street banks reward premier customers

At Patisserie Valerie, in the heart of the City of London, the people queueing in the morning rush have a uniformity that goes beyond their pinstriped suits. The bankers and traders waiting impatiently for their coffee are brandishing a small black piece of plastic. It is a Barclays Premier card and they are taking advantage of one its perks: free morning coffee at selected outlets.

City workers are often ideal candidates for the premier services offered by high street banks, which typically target those with an annual income of £50,000-£75,000 or savings and investments of more than £100,000. Premier accounts usually offer customers access to special rates on mortgages, investments and savings products, but, in a bid to stay competitive, they also offer perks that are a small price to pay for the banks looking to lock in wealthier customers.

FT Money looks at the different accounts on offer and asks: if you qualify for a premier account, which gives the best bang for your buck?

Do you qualify?

The good news is that premier accounts are largely free. HSBC Premier, Barclays Premier and NatWest Premier — the three main players — have no charges for customers earning enough or holding a minimum level of savings and investments with the bank. Those who have put less away may want to consider HSBC rather than Barclays Premier. While both banks require an annual salary of at least £75,000, Barclays requires — as an alternative — savings and investments of upwards of £100,000, compared with just £50,000 at HSBC.

And if you and your spouse earn less than £75,000 each, you might still qualify for the NatWest Premier account, which will accept £120,000 in joint income, or £100,000 in single annual income. Santander Select is the outlier in its £5 monthly fee, though it requires savings and investments at the lower end of £75,000, or £5,000 net monthly income.

The financial benefits offered by the premier accounts are fairly standard. All say they offer preferential rates on a range of products such as savings, investments and mortgages. HSBC offers free annual travel insurance for no charge. However, as with Barclays’ offer of home insurance through Hiscox (which is not free, unlike the HSBC travel insurance) this is with one just provider — Aviva Insurance — so people might want to shop around to make sure any specific needs are covered.

Other perks include being able to take out £1,000 a day from an ATM instead of the standard £250 and 24-hour telephone access to a customer service team.

Best of the premier baubles

Premier accounts also offer a plethora of non-financial perks to entice new customers into the bank. Free entry to English Heritage sites; a year’s free membership to Picturehouse Cinemas; free daily coffee at certain vendors; and a year’s free membership to the Gourmet Society are among the sweeteners offered by Barclays.

New premier clients at HSBC enjoy a night away at a luxury hotel in the UK. Many of these describe themselves as classic Edwardian or Georgian country homes and are designed to appeal to those used to a certain lifestyle — which is often what the premier banking experience is aiming to tap into.

Barclays Premier

Culture and coffee

Entry requirements:
£100,000 savings or investments with the bank; or annual income of at least £75,000.

Requirements ever waived?
No.

Private bank entry requirements:
Customers with more than £500,000 are passed to Barclays Wealth and those at the higher end — with no fixed level — are passed to the private bank.

Financial benefits:
Loyalty rewards; fee-free overdraft of up to £1,000; fee-free international payments online or by mobile; up to £1,000 daily cash machine withdrawals. Access to premier mortgages, loans and home insurance.

Other perks:
Free entry to English Heritage sites; a year’s free membership to Picturehouse Cinemas; Free daily coffee from various outlets. A year’s free membership to the Gourmet Society, giving customers restaurant discounts

Premier accounts also offer exclusive access to credit cards that come with their own perks. The HSBC Premier credit card offers free Wi-Fi access worldwide through Boingo, a mobile internet access provider, airport lounge access and £20 Uber vouchers when flights worth more than £500 are booked. By contrast, the Santander Select credit card, while also offering airport lounge access and Boingo WiFi, comes with a £15 monthly fee — though it does waive foreign exchange fees when paying abroad in the local currency. Santander Select customers can also get fee-free withdrawals from the bank’s ATMs overseas.

Paying the piper

While the banks like to emphasise the customer experience and services they offer, premier customers are lucrative prospects for banks that are looking to cross-sell premium savings, mortgages and investment products and keep as much money as they can in-house.

“Slowly as providers have been extending their range this is another way of offering an account to newer customers and branching out into a niche area,” says Charlotte Nelson, analyst at finance data group Moneyfacts. “Their hope is that you invest your money in other products.”

HSBC Premier

Free WiFi, hotel discounts

Entry requirements: Savings or investments of at least £50,000; or income of £75,000 plus one life insurance, mortgage, investment or protection product with the bank.

Requirements ever waived? Customers have a six-month window to qualify after opening the account. The bank is considering looking at earnings trajectories.

Private bank entry requirements: Around £3m for the private bank; £500,000 in savings and investments for the premier-plus offering, Jade.

Financial benefits: Free travel insurance. Preferential mortgage rates. Exclusive access to a choice of two credit cards: HSBC Premier Credit Card or, for a £195 annual fee, HSBC Premier World Elite Mastercard, that provide travel benefits and reward points. Access — for a fee — to HSBC financial advisers.

Other perks: Holders of the HSBC Premier Credit Card get free WiFi access through Boingo worldwide; airport lounge access; 10 per cent discount on selected hotels and £20 Uber vouchers when flights costing more than £500 are booked. New customers get a Premier night away at a choice of more than 50 UK hotels.

“The key driver for the banks in offering premier banking accounts is to cross-sell lucrative pension, investment, insurance and mortgage business to high net worth clients,” agrees Andrew Hagger, personal finance expert at consumer website MoneyComms. “With regards to the fee-charging accounts or credit cards, they do offer value for money but, as with the much-maligned packaged bank account market, only if the customer makes good use of the rewards and benefits available,” he cautions.

Unsurprisingly, banks play down the idea that premier clients might be a money-spinning opportunity. Greg Went, HSBC’s head of premier, argues that the premier offering is “designed to really meet customer need rather than to do anything more substantial from a strategic perspective from the bank”.

Mr Went points to HSBC’s research into the needs of premier clients and says that while wealth accumulation was an important feature, “the focus on family values and family prosperity was at the forefront of many people’s minds”. To that end, the bank launched a service giving preferential mortgage rates to the children and grandchildren of its premier clients. “Our focus going forward is to see if we can bring access to family members too,” he says.

In that respect, premier bankers are thinking along the same lines as private bankers — where the concern is to keep clients through the generations and avoid the phenomenon of millennials ditching their parents’ private bank once they inherit wealth. “The thinking is absolutely around building those long-term relationships,” says Mr Went.

Special dispensation

Perhaps mindful of the need to attract younger clients, HSBC is also looking at offering access to premier accounts for people who do not fulfil the minimum requirements but are on a clear trajectory — as NatWest already does.

Phil Northey, NatWest’s managing director for premier banking, says that premier customers are looking to “feel valued”. Those that sign up for the account get a premier banking manager. Products and perks, he says, are designed around the lifestyles of typical premier customers, who tend to travel more — hence airport lounge access offered through the Reward Black account, for a monthly fee of £28. Perks include things that “money can’t buy”, says Mr Northey, such as taking clients to a training session with the England cricket team or partnering with the English National Ballet on events. Such invitations are made to certain clients by their relationship managers, once they get to know the clients’ interests. “It goes beyond a banking experience,” he says.

NatWest Premier

Cricket or ballet?

Entry requirements: £100,000 sole income or £120,000 joint income; or £100,000 in savings or investments with the bank; or £500,000 outstanding mortgage borrowings with the bank.

Requirements ever waived? Yes, for professionals on a clear earning path or business owners.

Private bank entry requirements: No fixed rule, but customers are not typically recommended to consider Coutts, part of the NatWest group, until they have £1m-£2m in investable assets.

Financial benefits: Preferential rates on savings; 1 per cent cashback on investments through online NatWest Invest service; bespoke insurance policy covering multiple homes, cars and pets; access to interest-only mortgage facility; preferential rates on travel money and fast-track fraud service.

Other perks: A focus on “money can’t buy” experiences such as inviting clients to English cricket team training or English National Ballet events.

Note: Premier customers can also take out a Reward Black account for a monthly fee of £28 that offers perks including travel insurance, airport lounge access, a 24/7 concierge service, car breakdown cover and 2 per cent rewards back on household bills paid by direct debit

Unlike Barclays or Santander, NatWest will waive its minimum requirements for premier customers when they show a clear earnings trajectory, Mr Northey says, such as those with jobs in certain professions. The bank also works with its business and commercial colleagues to identify directors or owners of companies likely to have a financial windfall.

“Premier is a very, very important part of our business,” he says. “While it’s small in numbers of customers they are very important to us.”

Premier customers can also find themselves first in line for a bank’s online innovations. This summer, NatWest launched a “Receipts” service for premier clients that allows them to take photos of their receipts via the online banking app and send them to a dedicated storage spot to help them keep track of their spending. “It is quite normal when we launch a new product for these [premier] customers to have it first,” says Mr Northey.

How the high street banks treat their wealthiest customers — not to mention the amount of money they are spending on freebies to woo them — may come as a shock to less well-heeled customers of the same bank.

Santander Select

A traveller’s friend

Entry requirements: £75,000 in savings or investments with the bank; or a monthly net income of £5,000.

Requirements ever waived? No.

Private bank entry requirements: £500,000 in savings or investments with the bank; or an annual gross of income of £250,000 or more.

Financial benefits: Exclusive rates and discounts across savings, loans, mortgages and insurance products. Interest of 1.5 per cent on balances up to £20,000 and up to 3 per cent cashback on selected household bills. Fee-free withdrawals at Santander cash machines abroad; higher ATM withdrawal limit of £1,000.

Other perks: Select customers can take out a Santander World Elite Mastercard credit card for £15 a month and get airport lounge access, WiFi access through Boingo around the world; a concierge service; 40 per cent discount on Santander travel insurance and no foreign exchange fees for card payments abroad when paying in the local currency.

Note: Santander Select carries a monthly fee of £5

But the basic business model of all UK retail banks is to offer a free personal current account to customers who remain in credit. Even if this activity in itself is loss making, current accounts act as a “gateway” product to sell other services, be it insurance, loans or credit cards, which generate the profits.

Critics have questioned the future for the UK’s free in-credit banking model, pointing out how revenues raised from overdrafts and bank charges fall disproportionately on the poorest customers. The Financial Conduct Authority is exploring these questions as part of its wider strategic review of retail banks.

Another problem that some FT Money readers say they have experienced is being “dumped” by their bank’s premier service following a drop in income, or after changes have been made to the terms and conditions.

Similarly, one reader told us how she received a gushing call from her bank’s premier team asking if she would like to upgrade her account. “I had a lot of money in my account for a few weeks, as we were about to move house,” she said. “That was what prompted the bank’s call — but when they found out that the funds were a one-off and that I earned a lot less than £100,000 per year, they couldn’t get off the phone quickly enough.”