The ambience of the bank based in Linz is something to admire: in the meeting room, a long wooden table rises in the middle, while stylish pictures adorn the wall to the side. The anteroom impresses by its completely gilded wall with big letters that spell: Partner Bank.

The focus of the provident-bank is on a portfolio of bonds, equities, funds, and ETFs, as well as overnight funds and physical gold. After just a few minutes in an interview with the two board members, Elham Ettehadieh and Andreas Fellner, one thing becomes crystal clear: the main focus here is on the people. "The basic idea behind the foundation was to be a bank for the economic development of the people. Because it is important to put something aside for your long-term economic development in order to have enough money available later", says Ettehadieh, who joined the bank in 2006 as an assistant in sales management. In 2013 – after holding several positions in the security, marketing, and product development departments – she was appointed to the Executive Board.

The headquarters of Partner Bank with five floors, placed in the City Centre of Linz, has 45 employees, almost 20 in IT. But there are no lines of customers waiting their turn to seek advice at the counter. The bank has no branch network and instead relies predominantly on the cooperation with independent financial service providers in Austria, Germany, Hungary, the Czech Republic, Slovenia, and Slovakia. "If you build branches, the initial fixed costs are enormous. They also build a distance between the bank and the customer. With independent financial service providers, you are exactly where the customer is – and we are not restrained by any opening hours", says Ettehadieh.

Elham Ettehadieh
... joined Partner Bank in 2006 and has been a board member since 2013.

Andreas Fellner
... took over the IT department at Partner Bank in 1998, and has been a board member since 2005.

Currently, around 400 consultants and financial service providers work under the umbrella of Partner Bank. Fellner categorises them into three groups: first, there are the tied agents operating under the liability umbrella of Partner Bank. The second group consists of independent financial service providers who hold a securities concession – in this case, Partner Bank acts only as a custodian. The "recommenders" form the third group – these may recommend to customers the gold portal and the bank portal of Partner Bank. These customers are then advised by Partner Bank itself.

"Complexity increases with a network of 400 partners, since countries have different market conditions and every financial service provider has its own customers. That is why we're working on a digital network that will support consultants and customers", says Ettehadieh. To achieve this goal, the bank focuses on digital processes. Already in 1992, a central database was installed, where all information on customers, transactions, and securities is stored. The purpose of viewing this data is to enable the consultants to serve the customers in the best possible way. One of the advantages: the platform can be used in the respective languages.

As part of the ongoing digitalisation, the consulting process at Partner Bank has also been divided into two parts: on one hand, customers can access the bank portal directly via a recommender (who may only record and share the contact details of a potential customer). The customer then goes digitally through the consultation processes, which can then be completed with a personalised investment recommendation. Fellner describes this as the "Robo-Advisor” – a tool that is already used for asset management with ETFs and shares of top companies. The second part concerns the consultation of a client by a certified financial advisor, who makes appropriate recommendations on products. The customer can then accept the business online – this tool is called "hybrid consulting". As of this autumn, Partner Bank will also offer netbanking to its customers, including a debit card and later also a credit card.

Partner Bank is a hybrid among banks, combining the character of a traditional bank with a strong focus on personal advice and service, with the traits of a digital enterprise that develops modern innovations with private banking quality. Nevertheless, Partner Bank is still relatively small in size: it currently has over 20,000 client custody accounts and achieved a profit of €752,000 in 2016.

In 2017 and 2018, the earnings were not as high, due to large investments in market expansion and digitisation. According to the executive board, Partner Bank does not have short-term profits in mind, but focuses rather on long-term planning and investment.

Advantages as a niche player

But the bank wants to use its small size to its advantage – not only in terms of innovation, but also in positioning itself as a niche player. The product portfolio is lean, the forms of investment should be presented to the customer in an uncomplicated and comprehensible manner. "In securities business, the trend has long been towards ever more complex products, but there are these basic elements that can be used to build long-term customer investment. The clearer and simpler these are, the more manageable the risks are", says Ettehadieh. The two board members have great ambitions for the coming years. "We would like to achieve a much larger market share and be the go-to address, especially for equity investments by people who want to build something long-term," says Ettehadieh. Fellner: "We're only at 10% of our big goal". Now it’s about expanding both geographically and in terms of our partner network. The strongest markets so far are Austria, Germany, and Hungary.

They are also currently building additional programming interfaces (APIs) to cooperate with other fintechs and thus expand its own range of products and services. "We strongly believe that clients need some kind of personal advice, especially in the investment sector", says Ettehadieh.

Long-term growth

Ettehadieh and Fellner want to make long-term investments to ensure the growth of the bank. Partner Bank was founded in 1992 as the first private bank outside Vienna in the Second Republic. The bank was incorporated into the Foundation for Social and Economic Development, a private foundation of the Ettehadieh family, based in Liechtenstein. The Foundation sees its purpose in the promotion of social and economic development. In addition, the Foundation established the non-profit organisation, Two Wings, that promotes the training of young people in developing countries. "Two Wings is a metaphor for a bird that can only fly when both of its wings are equally developed. Thus, the 'bird of humanity' can fly, only if man and woman, the northern and southern hemisphere, as well as material and social development, are promoted equally", says Ettehadieh. Even when it comes to the appointments to the Executive Board, Partner Bank offers a distinguishing feature: with Sarvenas Enayati and Elham Ettehadieh, two women are sitting on the board. The positions of risk manager and authorised signatory are also filled by women; to the opinion of the executive board, this balance between the sexes gives the bank significantly more quality.

For Fellner, a broader social issue has to become relevant in the future in order to be able to facilitate stable growth: "our main effort will be to increase the percentage of Austrians holding stocks of top companies.” In this context, Partner Bank emphasises that it is not the issuer of the securities or fund managers of the selected investment funds or fund of funds (for example, if customers decide to invest in a stock or ETF basket as part of their asset management). Thus, the securities experts of the bank are able to objectively choose the most promising securities for the customers.

Partner Bank faces the challenge of combining the traditions of a firmly developed bank, with the speed of fintech companies. The outcome will depend largely on the extent to which Partner Bank dares to try out completely new things. All while not losing sight of its main focus – the people.