Friday, March 16, 2012

More banks to tap into emerging wealth segment in Asia

SINGAPORE: United Overseas Bank's (UOB) wealth management segment has attracted S$260 million in assets under management (AUM) in just three months.

Experts said this is a clear sign that wealth continues to grow strongly in Asia, with more banks now expected to move into this segment and tap the growing opportunities.

The "rising rich" and the "emerging affluent" - these are the new breed of customers that banks have set their sights on. They may be considered as being one tier below the auspicious rich that enjoy the services of "privilege" banking, but they still symbolises the new generation of wealth in Asia.

According to reports, the number of wealthy Asians will grow 140 per cent and reach 2.8 million by 2015.

There are now over 500 million people in Asia with a net worth of US$10,000 to US$100,000, and the financial services revenues from this segment are expected to grow by eight to 15 per cent annually in most countries.

These customers are also typically younger, between 30 to 45 years old, are more mobile and new to wealth management.

To cater to the needs of customers with assets under management between S$100,000 to S$350,000, UOB will be building three wealth banking centres at Scotts Square, Katong and Tampines to serve this "rising rich" segment within the next four months.

With a customer base of about 240,000 in Singapore, UOB said its current number of 80 relationship managers is not enough.

James Phoen, managing director of Personal Financial Services at United Overseas Bank, said: "We are continuing to hire more relationship managers in wealth banking. Hopefully, we can increase the servicing ratio...There's no limit to how much we can serve the 'rising rich'. If I want to penetrate at least 30 per cent of this customer base, three centres is definitely not enough."

Foreign banks, like Citi for example, have also re-branded their emerging affluent segment. This is part of its move to grow the segment and serve those with assets from S$50,000.

Han Kwee Juan, CEO and Country Business Manager of Citibank Singapore, said: "Growth has been fairly strong. When our customers go above S$50,000, we will assign a personal banker to them who will provide wealth management services for them. We have seen an increase of about 20 per cent in that customer base, whereby they have come in with either fresh funds or new customers.

"We will continue to hire in this segment and that is our key strategy over and above our Citigold strategy that we already have. This segment continues to play an important part for us because we believe in the life-cycle, so naturally these customers will grow with us and grow into Citigold (customers)."

There are not many players targeting this market segment right now but analysts expect this to change going forward, due to the increasing growth opportunities and rising affluence in Asia, in particular, Singapore, Malaysia and Indonesia.


View the original article here

Source From Channel News Asia

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