Private Banking Special 2014: The Rise Of Asia

Singapore and Hong Kong are amongst the most dynamic economies in the world. Asia is becoming a strategic region for the global private banking industry as it represents an enormous business opportunity, and as such competition is intensifying among players for this market.

On the other hand, the private banking industry is faced with increasing costs and falling revenues, and it is expected that industry consolidation is inevitable.

The case for consolidation is even greater as private banks in the present industry environment have to reach a certain critical mass, which is needed for essential investments in various strategic and operational areas.

To remain competitive, private banks would need to make investments in the development of services, product platforms and transverse functions in order to meet the expectations of customers, regulators and also in terms of efficiency and cost control.

Asian wealth booking centres like Singapore and Hong Kong have become globally known for their political and economic stability.

Furthermore, the regulators in both jurisdictions have got a very good reputation of competence and professionalism. The robust regulatory framework provides invaluable protection to both clients and bankers.

It is interesting to note that the assets under management continue to increase in jurisdictions with robust regulations such as Hong Kong and Singapore.

Due to many such positive aspects, these two hubs are well positioned to attract capital from all over the world, offering investors an interesting array of diversification and asset options.

Despite growth opportunities in Asia, there are also certain operational challenges for the private banking industry. Currently, total Asian wealth is estimated at around $28 trillion, and this is expected to grow up to $48 trillion by 2017.

Out of this total Asian wealth estimation, as much as 80 per cent will be domestic wealth creation in China, India and to some extent Australia. The creation of new Asian wealth is leading to increasing competition among private banks that want to get a greater slice of this new business.

With more competition, the challenge for private banks is to differentiate themselves, and have a better offering if one has to stay ahead in the business. Amongst other challenges, private banks are also faced with human capital issues due to selective recruitment strategies and talent scarcity in the market.

Interestingly, Singapore is often described as ‘the Switzerland of Asia’ due to its emerging popularity as a global wealth-booking centre. It can be said that newer private banking hubs like Singapore and Hong Kong are complementary to traditional centres like Switzerland, and should not be viewed as competitors.

Well known private banking hubs like Switzerland, Singapore and Hong Kong offer an equal degree of service quality, professionalism and expertise in all wealth management solutions. In today’s world, clients prefer private banks to have multi-booking capabilities, offering broader diversification opportunities in terms of geography, asset class and investment solutions.

With inputs from Hans Diederen, head of Asia Region, Crédit Agricole Private Banking

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WHAT TO EXPECT OVER THE NEXT 12 MONTHS

* New generation clients are well educated, and are highly sophisticated in their wealth management needs.

* Many new clients are entrepreneurs who are looking to grow their business, while seeking to manage their wealth efficiently.

* Private banks will have to adapt to new realities, and partner with their clients in their ambitions, and offer them the best-bespoke services to fulfil their aspirations.

* Local and regional private banks are offering clients an increasing level of exposure to local and regional asset classes.