Harimau Capital

Private banks are pulling out the stops to woo high-net-worth individuals in Singapore. According to a recent report by Knight Frank, Singapore is poised to surpass Tokyo as the Asian city with the most number of such wealthy individuals within a decade.

 

SINGAPORE: Private banks are pulling out the stops to woo high-net-worth individuals in Singapore. According to a recent report by Knight Frank, Singapore is poised to surpass Tokyo as the Asian city with the most number of such wealthy individuals within a decade.

Forbes estimates that by 2017, one in every 20 Singaporeans will be a millionaire.

Amid the growing competition for such clients, industry watchers said that rising business costs and a tight labour supply makes this environment even more challenging for private banks.

UBS, the largest private bank in Asia (with approximately US$247.7 billion of assets under management) has just introduced a new product for its wealthy clients in the region, UBS Advice.

Previously only available to institutional clients, UBS Advice is a software that allows clients to obtain more timely personalised investment advice, and who at the same time, wish to maintain full decision-making power over their investments.

Their clients are high net worth individuals, with more than US$1 million in investible assets.
While it is using more technology to help clients manage their wealth, UBS said the personal touch will not be compromised.

Kathy Shih, CEO of wealth management in Asia Pacific at UBS AG, said: "It doesn't lessen the interaction because every investment idea is delivered by the client advisor to the client personally. And whatever modes they have used in the past, be it by phone or in person, it would still be the same mode of interaction.
"Markets are riskier now, they are often influenced very much by central bank policy and there are a lot of new regulations, so this is a challenging environment."

Mohit Mehrotra, executive director of Deloitte Consulting, said: "Given the nature of the private banking business, obviously a lot more customisation is required for a more advice-driven business. So it's hard to replace that physical touch with a digital play.

"But clearly there is a co-existence of both that's important to deliver the sophisticated experience to the client."

While the private banking industry in Asia continues to grow, the environment remains extremely competitive. And with the shortage of talent in the market as well as rising business costs, analysts said private banks need to find ways to reduce costs and at the same time, improve service levels and productivity.
This means private banks are exploring different kinds of propositions to boost their services and attract clients.

Mr Mehrotra added: "On the cost side of the equation, many of the banks are trying to look around client optimisation -- what are the types of client they should focus on to generate better income for the cost that they are investing in these clients."

Besides investment costs, experts said increasing costs of compliance and regulations will also add further strain to private banks' bottomline.

There are at least ten private banks in Singapore and the major players include UBS, Citibank and Credit Suisse.