The exits (and subsequent acquisitions by domestic Asian players) of Barclays, ANZ, and ABN Amro among several others, from Singapore in 2016 sent an eerie sign that the industry is no longer as profitable for international players as it once was. Meanwhile the relentless growth of domestic players highlights a sticky population of clients unwilling to switch.
And yet, 2017 is already witnessing a tonal shift, particularly among the top ten players in the region – the majority of which are global banks [Figure 1]. Indeed, last year’s mass exodus is being viewed as a blessing in disguise by some. The premise is that as others exit – competition should weaken, reducing pressures on costs.
If 2016 marked the start of Asia’s age of consolidation, then in 2017 two items will be on the agenda for firms striving to survive: talent and technology.
Figure 1: Leading banks in Asia by AUM
Yeng Fang Ong, Head of UOB Private Bank, believes that being a local player will be the ultimate advantage: “The bank was founded 80 years ago. A lot of the clients – the first generation – have been with us since then. The bank and the clients grew together.”
Increasingly, however, international operators are trying to replicate local knowledge, language skills and cultural understanding with their hiring strategy.
UBS, for example, the world’s leading bank by AUM, is hiring aggressively and expects to almost double its overall headcount between 2016 and 2021. Having launched its collaboration with Fudon University last year, it is likely that the Swiss banking giant is trying to cultivate a local base of qualified talent.
Meanwhile, the power of, and need for, digital initiatives across Asia continues to grow as customers’ appetites for instant information regarding their investments rise. These strategies, however, will need to be carefully considered and adapted to local contexts and values.
The pairing of human and artificial intelligence, for example, will be increasingly used to predict future client needs and behaviours. DBS Private Bank caught on to this idea as early as 2014. Today, its advisors use IBM Watson’s AI powered products to tap into “reams of research” and data offering clients timely recommendations on their investments.
Credit Suisse, another global player, is also paving the way to bring digital capabilities to wealthy clients across its fastest growing Singapore and Hong Kong hubs. The goal is to equip relationship managers and customers with the right information, which it “offers through Apple products and the Internet, with a Google Android version on the way”.
Such capabilities are already out there in the more advanced commercial banking world, so 2017 will hopefully see the Asian private banking industry play faster catch-up to some of the cutting-edge digital innovations out there.
And tailored digital strategies make particular sense in Asia where clients are more active participants in their investments. Ultimately, digital gives them more to discuss and this is expected to bring clients and advisors closer together.
The culture shift, from traditional to digital, will take some time and training but with Asia now having overtaken North America in volume of wealthy individuals, businesses cannot afford to delay.
As such, we anticipate both local and international players to invest heavily into localised talent and technology to develop bespoke regional platforms that are better suited for their target markets.
Thought for the week: “Nothing relieves and ventilates the mind like a resolution.” – John Burroughs (American naturalist and nature essayist, active in the U.S. conservation movement.)
News from the world of wealth:
The imperative need for Digital Innovation in Wealth Management – [Fintech Innovation]
Measuring success in wealth management – [Hubbis]
A deeper look at BSI’s Singapore 2016 meltdown – [Bloomberg]
Author: Jenny Kvaskova, Senior Analyst
Background: Prior to joining the Scorpio team, Jenny worked at UBS Investment Bank in New York. She has also worked at FreshMinds, an insight and innovation consultancy in London, where she was involved in a range of financial services projects.
Education: Jenny holds a BSc in Economics and International Development from the University of Bath and a PGC in International Business from the University of Chester.
And at the weekends: Jenny is usually outdoors – playing racquet sports, hiking, skiing, or taking part in some kind of sporting activity. And living out her favourite inspirational quotes.