Coutts & Co,
the private banking division of RBS, is remodelling its strategy in
Asia as part of ongoing attempts to reposition the bank and its
brand.
Analyze opportunies within the wealth management market in APAC
- The report analyzes the APAC wealth and retail savings and investments markets. This includes affluent market size, both by number of individuals and the value of their liquid assets.
- The affluent population grew by 5.3% in 2021 and is expected to grow at an AAGR of 4.8% between 2022 and 2026.
- The value of liquid assets held by the affluent segment surged by 8.4% in 2021, backed by economic recovery. HNW individuals’ financial wealth grew by 12%, while mass affluent individuals’ wealth grew by 6.0%.
- The report provides an analysis of factors driving liquid asset growth. It is also split into asset classes - equities, mutual funds, deposits, and bonds.
- The affluent population are more risk-tolerant and invest a significant proportion of their investments in risky assets such as equities, compared to emerging affluent and mass market individuals.
Earlier this month, the international arm of the private bank, formerly called RBS Coutts, dropped RBS from its brand and is now being marketed under Coutts & Co as part of a single global brand.
The rebrand is part of a broader rethink around the way it segments and services clients, according to Nick Pollard, chief executive of RBS Coutts in Asia.
Private banks across the region are struggling with rising cost-income ratios, with revenue impacted by less active clients and costs remaining stubbornly high because of wage inflation.
One of the cost pressures in Asia is the number of clients that are being serviced by private banks which are below their usual wealth threshold, usually around $1m or $2m.
Providing services to these individuals is costly because they tend not to generate the level of fees needed for wealth managers to operate profitably.
Stronger segmentation
Pollard is
addressing this problem at Coutts by creating a bigger differential
in service levels between segments, particularly at the lower
end.
Coutts’ usual range for client wealth is between £0.5m and £75m ($0.8m to $121m).
Within this, its core market is in the £1.5m to £10m bracket, which is to be operated under a division called Private Wealth.
Clients with £10m or more of investable assets will be able to access the bank’s Private Office services, which will offer lower client loadings and in some cases coverage from Coutts and RBS’s corporate and investment bank.
The key challenge for Pollard is how to deal with clients under the £1.5m threshold. Coutts is calling this segment Private Banking but is not targeting growth at these levels.
Instead, Pollard is looking for ways to service its clients in this bracket more cost effectively, while still allowing them to have a good customer experience with Coutts.
“The issue for us is they are part of the Coutts franchise and we want to make sure they get serviced properly,” he says.
“We also have to do that in a commercially effective way. Some of that will be using technology; some of it will be using slightly different approaches to that market. But all of it will be to make sure the client is still able to say they have an account with Coutts and it operates in a way that suits them,” Pollard adds.
Too thinly spread in Asia
Pollard is also reorganising the bank on geographical lines. He says the bank is currently too thinly spread across Asia, operating in a number of markets where it does not have the scale to offer the platforms and services in a cost-effective way.
He is rationalising Coutts’ footprint in Asia to focus on a revised set of “core markets” in which he believes the bank can expand market share.
These markets are onshore Hong Kong, China, Taiwan, onshore Singapore, Indonesia, India and a global non-resident Indian proposition run out of Singapore.
“It doesn’t mean we won’t have connections or clients in some of the other countries around the region, perhaps notably Thailand and Malaysia, etc,” he says.
“But they won’t be top of our priority list. We will be focused on growing the business in those core markets,” Pollard concludes.
Costs, including expenses around legal fees, travel and hiring, are among the reason he gives for the more consolidated geographical approach.
The strategy is part of an attempt to grow Coutts’ number of international clients to around 60% of its total, up from around 40% now.
Analyze opportunies within the wealth management market in APAC
- The report analyzes the APAC wealth and retail savings and investments markets. This includes affluent market size, both by number of individuals and the value of their liquid assets.
- The affluent population grew by 5.3% in 2021 and is expected to grow at an AAGR of 4.8% between 2022 and 2026.
- The value of liquid assets held by the affluent segment surged by 8.4% in 2021, backed by economic recovery. HNW individuals’ financial wealth grew by 12%, while mass affluent individuals’ wealth grew by 6.0%.
- The report provides an analysis of factors driving liquid asset growth. It is also split into asset classes - equities, mutual funds, deposits, and bonds.
- The affluent population are more risk-tolerant and invest a significant proportion of their investments in risky assets such as equities, compared to emerging affluent and mass market individuals.
