Private wealth clients are increasingly open to digital adoption, especially in the tech-savvy region of Asia. Are private banks worried about having their lunches eaten by fintechs? finews.asia speaks with industry leaders.
Based on industry figures, individuals with at least $1 million in liquid wealth (high net worth individuals or HNWIs) are now more than just extremely receptive to tech firms as alternatives to traditional wealth managers. And in Asia, it appears practically inevitable in the immediate future.
93 percent of HNWIs in Asia Pacific ex-Japan said they would consider being a wealth management client if «BigTechs» – Google, Apple, Facebook, Amazon, Alibaba or Tencent, for example – were to open shop, according to Capgemini's World Wealth Report 2020, based on surveys conducted in January and February this year.
And for the subset of individuals already planning to switch their «primary wealth management firm» in the next 12 months, the figure climbs to 98 percent. In Japan specifically, this figure reached 100 percent – an anomaly for any surveys with sufficient sample sizes. Does this make traditional private banks nervous? Industry leaders sound-off with finews.asia.
Not 1-on-1
Despite the receptiveness, private banks are seemingly little worried about actual threat to market share, even if many clients were to open accounts with fintechs. The consensus view is that while the market contains numerous specialists that can contribute to various components of the wealth management business, it lacks a true player that can holistically address HNWIs’ diverse needs.
«[In the short to medium-term] it is unlikely that a single fintech company will compete head-on with a private bank,» said Cedric Lizin, Standard Chartered Private Bank’s head of ASEAN & South Asia, highlighting a recent pilot initiative with external providers aimed at effective client acquisition that resulted in dissatisfactory results. «This will probably require an ecosystem of various fintech companies to team up, each one delivering a specific functionality.»
«[O]verall, we believe our offering is sophisticated for this target segment – especially the differentiated and holistic One-Bank approach (investment banking and asset management collaboration) – and hence it will be difficult for digital players to directly compete with us,» added Werner Schlossmacher, Credit Suisse’s APAC head of platform management, though he noted that the pace of new emerging technology is rapidly increasing.
Fighting Fire with Fire
And in the event that the market manifests a formidable ecosystem of fintechs, how will private banks respond? With an ecosystem of fintechs.
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