Wealth managers tap mass-affluent market in Asia – The Asset
Across Southeast Asia new wealth is being created. And the competition to onboard the growing ranks of families and individuals in the mass-affluent market in the region is getting even more intense.
The prize is huge, and the winners will be those who fully understand their customers’ needs.
A large tranche of the new wealth in the region comes through small and medium enterprises (SMEs). As such, banks will have to build an empathetic and supportive relationship with these businesses, helping their owners in managing their wealth, providing liquidity solutions, and guiding them in crafting and facilitating their business succession plans.
The Asset spoke with McKinsey & Company’s partner Fumiaki Katsuki and associate partner Vishal Kaushik to discuss the growing wealth management business in the region.
Hanoi-based Katsuki leads the firm’s wealth and asset management work in Asia-Pacific, and co-leads the financial services practice in Vietnam, Japan, and Asia-Pacific, while Singapore-based Kaushik is the wealth and asset management lead for Southeast Asia and Singapore.
TA: The largest global wealth managers have indicated they are keen to enter the mass-affluent customer segment in Asia, but doesn’t this chase for the lower thresholds of assets risk diluting their reputation as wealth managers to ultra-high-net-worth (UHNW) clients?
FK-VK: These segments have been underserved and now the banks/wealth managers are redefining their operating models while leveraging digital channels to ensure the model is cost-effective.
It’s not brand dilution but institutionalizing the private banking capabilities and expanding it to the lower segments while ensuring advice for all with a new operating model.
Separately, digital propositions built for mass and mass-affluent customers are increasingly becoming relevant for UHNW customers as customers warm to remote and digital service. So, building a capability here is actually helping serve their UNHW customers as well.
TA: Do Asian retail banks who work closely with self-employed/ SMEs/ family business customers have the best chance of success in winning affluent customers because of their enduring relationship?
FK-VK: The majority of wealth in the region is driven by SMEs/ business owners/ entrepreneurs and the operating model to serve these customers is unique with a “one bank” approach where you get the business/ corporate banking/ wealth management under a single proposition for clients.
SMEs are increasingly becoming open to having their banking needs met by the same bank, relationship manager (RM) versus traditionally having separate banking relationships and RMs.
On the other hand, mass individual customers will require a different service including simplified products, digital engagement with a heavy focus on data and analytics, and ecosystem partnerships …….