Above-average product holdings make the expat segment more lucrative than most. However, the entrepreneurial spirit is strong in the expat segment, and being able to cater to this segment’s private as well as business banking needs is critical.
1.8 million high-net-worth (HNW) expats make for a sizable target market. However, it is not only its size that makes them attractive but their above-average profitability. Data from our 2020 Banking and Payments Survey shows that financial product penetration is notably higher in the expat segment than other segments – on average, expats hold 11.4 banking or insurance products, compared to 9.1 among natives.
In addition, the expat sector is also significantly more likely to have sourced its wealth through entrepreneurship, further contributing to service uptake as they rely on their wealth manager for private and business banking needs.
When only accounting for self-made entrepreneurs (excluding those who have inherited a business), entrepreneurs form the largest expat segment, constituting 47.2% of HNW expats. This compares to a mere 18.7% among natives. Wealth managers looking to build up a dedicated expat proposition cannot afford to ignore this sizable segment.
While demand for support services varies among entrepreneurs, they represent an excellent means to connect with expats at an early stage. For example, being able to support HNW individuals with any legal and bureaucratic hurdles they may face in setting up new enterprises is critical when reaching out to expats. In addition, assistance with visa requirements and support throughout the lifecycle of a business (sourcing venture capital, providing business banking services, and ultimately facilitating the sale of a business) will be sought after across the board.
This is of particular importance in key business migration hubs. Taking a closer look at the global entrepreneurial community, 14% of HNW entrepreneurs run their business in another country than their country of birth, and the US – followed by the UK and Hong Kong – is the preferred location among expat entrepreneurs.
In terms of demographics, it is HNW investors from Russia, Turkey, Greater China, Poland, and India who are most likely to expatriate to start a business. In particular, Taiwan stands out. Just 14.7% of Taiwanese nationals residing in Taiwan have sourced their wealth through first-generation entrepreneurship. However, this proportion jumps to an impressive 63.9% among those who have left the country.
Assisting these clients early on during the start-up process is of particular importance for wealth managers with international operations, as they are in danger of losing clients to local players if they are unable to provide sufficient support. Meanwhile, local wealth managers may be able to pick up new business by promoting their expertise in the provision of business start-up services. In any case, targeting expats means offering business banking services.