Private banks in Asia are overlooking key segments while they chase ultra-high-net-worth individuals (UHNWIs) and are missing out on a potential $25bn each year as a consequence, according to research from global consultancy Oliver Wyman.
The ‘core wealth’ segment, those with $1-5m in investable assets, is under-served in the eight Asian countries examined, the research said.
There is $11.4trn in unmanaged wealth in the region with around $3trn of that in the core wealth segment.
The segment is under-served partly due to gaps in the current capabilities of premier banks, in terms of their staff, their products and their service capabilities, the research concluded.
Meanwhile private banks, while in possession of the required products and skills, lack processes and systems capabilities to handle increased volumes in terms of clients, transactions or relationship managers, the report said.
Furthermore, the high cost of accessing some investment products is also disenfranchising those potential clients whose investments are too small to receive discounted fees.
Focusing too narrowly on the prime metropolises might also be a mistake.
The research showed that focusing on the main city in each country provided access to only 30% of the core wealth segment, while a “Prime+2” strategy, which includes the next two largest cities, increases access to almost 50% of total ‘core wealth’ assets.
This is most relevant in China and India where the market is more dispersed.
Women, professionals and the young
Individuals under 40 years old control almost 35% of ‘core wealth’ assets in emerging Asia, yet the branding, marketing collateral and messaging of many organisations do not fully reflect this.
Almost 25% of ‘core wealth’ in emerging Asia is owned by women. Yet few organisations in the region have explored the specific needs of female wealth creators.
Professional employees and executives control 35% of ‘core wealth’, substantially more than higher wealth segments, because professionals’ lower lifetime earnings prevent them from becoming UHNWs.
Even in Indonesia – the smallest professional market in emerging Asia – clients aged over 40 hold $8bn in assets.