The Swedish bank, which has been expanding internationally since the mid-nineties, has been working to bridge the gap between private and retail banking, providing a far cheaper service than the traditional private banks and offering a service falling somewhere in-between the two. This modern peculiarity though is unlikely to become mainstream, writes Billy Bambrough

What have been until recently clear lines between private and retail banking are being eroded at Handelsbanken (HB), and it is clearly a model designed for a specific niche that has little danger of unseating either. The Swedish export is better regarded as a private bank lite than a retail banking revolution.

Hypothetically, if 1,000 random customers were taken from both a highly rated retail bank and a well regarded private bank the vast majority of the two would find the services on offer very inconvenient.

From a retail banking standpoint, branches are completely cashless. That is, no cash is accepted as deposits at branches at Handelsbanken at all.

Customers are left to find another way of getting their cash into their account, mostly through online transfers, all of which are subject to fees which are agreed on a customer by customer basis in an individual tariff agreement.

The bank has also be known to turn away customers if their deposit account is not going to be of a size big enough for them to bother dealing with (bordering on HNWI levels), cutting out a huge portion of the market and all but removing the bank from the main retail banking market.

The challenges for the bank in the private space seem to alienate a similar number of potential customers.

For example you won’t be assigned a personal relationship manager as a client of Handelsbanken but you will be able to call up your local branch manager for a chat whenever you feel like it, not providing the same level of personalisation as a traditional private bank but at a far smaller price, mainly levelled through the myriad of individual fees.

According to a recent Financial Times report on the Swedish bank, HB’s usage of the Swedish "church-spire principle", giving each branches manager complete control over decisions taken in the branch on an individual level for loans and interest rates, will "allow banks to regain customers’ trust and profitable growth." A noble idea, though highly difficult to image it scaling well, with the bank eventually having to resort to credit scoring, becoming exactly the same as the high street banks we see now to remain cost efficient. Retail banking is, at a level where people with low net worth are being banked, a largely difficult area in which to make much money.

Handelsbanken is certainly a viable business prospect (In the six months to June its UK household and corporate loan book grew 13% year on year, while its UK deposits more than doubled, and it now boasts 177 UK branches) but to envisage a world where the majority of people, or even a sizeable percentage of the population in both the western and developing world, bank in this way is entirely unrealistic.