Bank profile

Having launched in 2015 as the first new entrant into the UK private banking industry in over 30 years, Hampden & Co. garnered interest from private banks, wealth managers and investors alike. Meghna Mukerjee speaks to CEO Graeme Hartop to find out how the challenger bank is performing two years on

New entrants in UK’s private banking industry are few and extremely far between. So, when Hampden & Co. launched in 2015, it piqued the interest of other private banks, wealth managers and investors alike.

Founded by Ray Entwisle, former chair of wealth management firm Adam & Company, the Edinburgh-headquartered bank was backed by 250 shareholders with over £60m in capital raised for its launch.

It was a bold move, in retrospect, to enter the UK wealth management market at a time when private banks’ profit margins were – and are – being continuously squeezed by an ever-stricter regulatory environment.

The only new players bursting onto the scene were automated advisory service providers. However, despite the threat of digital disruption and traditional private banks trying to get digital makeovers, Hampden & Co. chose a quiet entry – going back to the basics of relationship-driven private banking.

Almost two years after its launch, CEO Graeme Hartop still seems steadfast on that objective. “We recognise we need to provide good service and create strong, personal relationships with our clients. Our relationship-driven approach will continue,” he says.

Hartop’s confidence in Hampden & Co.’s strategy is apparent from the limited amount of marketing the new bank has carried out. “A lot of our clients come from referrals and introductions,” says Hartop, who was previously MD of Scottish Widows Bank for almost two decades, and also worked with Entwistle at Adam & Co prior to that.

With Hampden & Co.’s main office in Edinburgh, the bank has an additional London outfit. Expanding the bricks-and-mortar presence does not seem to be a priority, however. “The private banking business has changed quite a lot and bankers now meet clients wherever they are. It can be in different parts of the world.

“It is less important for us to have a big branch footprint, but we are keeping an eye on where we need physical presence,” explains Hartop.

Hampden & Co. offers clients a full private banking service, starting from a current account to lending, mortgages and foreign exchange capabilities.

The bank started with a small number of experienced private bankers who would bring their experience and connections to the company. The bank’s client base has risen steadily since, “approaching 2,000 customers and growing well”, informs Hartop. “The client base covers a wide demographic, from the late 30s, or younger, with family linkages, to the mature end of the spectrum,” he adds.

Hampden & Co. has grown to a 70-people-strong staff, currently, with around 60 based in Edinburgh and 10 in London. “One of the pleasing factors for me is that now we receive CVs from bankers who come to us, wanting to join the Hampden & Co. team,” Hartop notes.

Hartop considers Hampden & Co.’s flexibility around its lending propositions and ability to deal with “more complex lending” to be an advantage. The bank also ensures strong connections in the professional community, with solicitors, accountants, wealth managers and other advisors to provide the “grade A private banking services that clients demand”. “We are focused on building relationships in a holistic way,” he adds.

Hartop agrees that the UK private banking sector is currently going through a challenging phase. Uncertainty in the political sphere is a top-of-mind concern, and the low-interest-rate environment continues to be a hurdle.

Alongside more established regulatory shifts from the last few years, new regulations are adding to the cost and operational pressures. The UK’s Open Banking directive, the Second Payment Services Directive (PSD2) and General Data Protection Regulation (GDPR) in Europe are adding to regulatory burdens, and are imminent challenges.

“We have a big number of staff members in the risk and compliance teams to stay on top of the regulatory changes. Risk and compliance teams at banks are very different now from what they were 20 years ago. It is essential for us to get it right,” says Hartop.

For a new private bank, Hampden & Co. has not launched any highly sophisticated digital channel propositions, and has made no noises either about wanting to compete with low-cost fintech players. In fact, it offers an internet banking proposition, with no bells and whistles, and is planning to launch a mobile banking service.

“There has been a lot of change and entrepreneurship, particularly in the digital world, and some marked successes in the fintech sector. Technology has also produced a lot of wealthy clients in the UK.

“There is a threat that automated advisory service providers will pick up business seeing the way clients are transacting now. But there is still high demand for traditional, relationship-based private banking offering. Clients really appreciate a personal service, which we provide,” says Hartop.

At the time of launch, Hampden & Co. partnered with Oracle for its technology infrastructure, using Flexcube – Oracle’s cloud-based core banking platform.

“We do have digital upgrades underway, as technology is extremely important, and we are continuing our series of enhancements,” adds Hartop.

Going forward, interest rates will be an important factor in defining the UK private banking industry’s dynamics. How technology develops will also be a vital area to watch, says Hartop. However, with pending Brexit negotiations still to create unknown challenges and opportunities for the sector, Hartop seems confident in continuing with the same approach for Hampden & Co.

“Wealthy clients will always value high-quality, personal service. Investors have largely taken recent events in their stride. What I find now is that people have the confidence to get on with things, and the UK economy has performed better than many had predicted.

“With regards to Brexit, how passporting rights are going to work will be a big point to watch. We are entirely UK-focused, so the impact at this point should be relatively light. For more extensive overseas EU clients, though, the impact could be quite significant.

However, we are confident that we can still make the economics work well at Hampden,” Hartop concludes.