As Asia emerges as the world’s largest wealth region, the one question foremost on the minds of all private bankers should be this: what does a typical Asian client look like?
By Shayne Nelson,
Global Head of High Value Client Coverage and CEO of Standard Chartered Private Bank
Asia’s high net-worth individuals (HNWIs) – those with USD 1 million or more investable assets – are in general younger than their western counterparts.
According to Capgemini and Merrill Lynch, 41 percent of HNWIs from Asia Pacific region are those who are at the age of 45 or under in comparison with a global average of 17 percent. This means they are still creating and growing their wealth, as opposed to western HNWIs who tend to focus more on wealth preservation.
Asian HNWIs also tend to be more ambitious. We see the same trend among Asia’s entrepreneurs, the region’s future rich. The 2012 Futurewealth survey, by Standard Chartered Private Bank, Scorpio Partnership and SEI, indicates that entrepreneurs in Asia set themselves considerably higher wealth goals than their counterparts in the West.
Future wealth also shows clear differences when it comes to what Asian clients like to spend their money on – and more generally what they prioritize in life. Asian wealth creators tend to be more driven and focused on achieving their professional goals. They are also more interested in buying luxuries such as cars, watches, jewelry and works of art.
All this naturally affects what Asia’s swelling band of millionaires need from private banks. So what should banks do to serve them?
Banking is all about relationships and commitment. It is about meeting the needs of clients, helping businesses to flourish, helping individuals to grow and protect their wealth. It is about listening to customers and supporting them to achieve their goals. It is about being relevant to people. This has never been more important than right now in Asia, as the region grows in wealth, closing in on the US for the number one spot, with an estimated 3.3 million HNWIs, according to Capgemini and Merrill Lynch.
While this trend is set to continue, powered by Asia’s high saving rates, increased domestic consumption and younger demographics, market conditions remain tight. Many private banks operating in Asia are experiencing higher cost, lower revenues and a decrease in return on assets, compounded by strong competition and regulatory changes in many countries.
This difficult environment calls for private banks to take steps to improve their profitability – carefully choosing which clients and markets to cover, while looking inwards to improve efficiency and control costs. But above all, it represents a great opportunity to get up close and personal with Asian HNWIs, growing with them and rethinking the private banking model to meet their needs on every step of their journey.
As I see it, there is a real opportunity now for private banks to engage and evolve together with their clients in Asia, developing a new, differentiated business model that works for clients here, helping them to grow and protect their wealth.
Published in HighEnd Mag, March 2012.
Photos courtesy of images.businessweek.com