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Top Story

Why private banks will live or die on innovation

Jul 25, 2016

BNP Paribas Wealth Management has carved out billionaires as a strategic growth segment, says Mignonne Cheng, explaining that this is an industry where being innovative and providing real solutions will be the difference between success and failure.


Despite the many challenges facing private banks in Asia, recent signs suggest this is an industry that continues to thrive.

A quick look at the latest World Wealth Report from CapGemini, for example, support this. It shows the pace and volume of growth, with Asia Pacific exceeding North America for the first time. 
The spotlight on compliance and governance is a crucial factor too. “The high bar for capital requirement, the increased transparency and greater scrutiny from regulators, and the prudent approach of private banks to business management, will provide clients with a stronger sense of safety and trust,” says Mignonne Cheng, chairman and chief executive officer for BNP Paribas Wealth Management in Asia Pacific.
Yet at the same time, Cheng’s bright outlook for private banking in the region is balanced with the fact she also knows the status quo faces imminent change. 
“I believe consolidation of the industry is likely to continue, as private banks need to achieve scale and efficiency,” she explains.
And as someone who has been active in the region’s financial markets for well over three decades, she is well-placed to judge the likely evolution in the look-and-feel of the marketplace.
Staying ahead
The way for private banks to ensure success amid today’s challenging environment will be to work hard at innovation. 
“This is in order to maintain relevance and better serve clients’ ever-changing needs,” says Cheng. 
In particular, she explains, when dealing with UHNW families, there is no other type of offering which can provide the same combination of high-touch, highly-tailored, holistic yet trustworthy personal services of handpicked, rigorously-selected and trained private bankers.
“Private bankers, as the last bastion of trust, must also maintain an enhanced awareness of their clients’ interest and protection,” explains Cheng. 
“They must consistently present the right ideas to clients, seriously taking into account the relevant risk profiles of those clients.”
Serving the mega wealthy
This is perhaps most relevant for the ultra wealthy, which is an increasingly important target segment for BNP Paribas Wealth Management.
In line with this, the bank is rolling out a new initiative, Mega Wealth, to focus on the wealthiest individuals. 
This follows on from the success that the private bank has found over the last few years in on-boarding billionaire clients. Indeed, it has reached a penetration rate of 17% in Asia, and close to 50% in Hong Kong.
“This client segment calls for a holistic banking approach, integrating investment banking and wealth management solutions,” says Cheng.
For example, this demands specific credit solutions as well as private investment opportunities as two of the key drivers of the initiative. “The billionaire segment is our strategic growth lever,” adds Cheng.
“BNP Paribas Wealth Management is gearing up its value proposition to this segment, in order to remain as the preferred partner to this increasingly-important population of clients,” she explains.

A quick look at the latest World Wealth Report from CapGemini, for example, support this. It shows the pace and volume of growth, with Asia Pacific exceeding North America for the first time. 

The spotlight on compliance and governance is a crucial factor too. “The high bar for capital requirement, the increased transparency and greater scrutiny from regulators, and the prudent approach of private banks to business management, will provide clients with a stronger sense of safety and trust,” says Mignonne Cheng, chairman and chief executive officer for BNP Paribas Wealth Management in Asia Pacific.

Yet at the same time, Cheng’s bright outlook for private banking in the region is balanced with the fact she also knows the status quo faces imminent change. 

“I believe consolidation of the industry is likely to continue, as private banks need to achieve scale and efficiency,” she explains.

And as someone who has been active in the region’s financial markets for well over three decades, she is well-placed to judge the likely evolution in the look-and-feel of the marketplace.

Staying ahead

The way for private banks to ensure success amid today’s challenging environment will be to work hard at innovation. 

“This is in order to maintain relevance and better serve clients’ ever-changing needs,” says Cheng. 

In particular, she explains, when dealing with UHNW families, there is no other type of offering which can provide the same combination of high-touch, highly-tailored, holistic yet trustworthy personal services of handpicked, rigorously-selected and trained private bankers.

“Private bankers, as the last bastion of trust, must also maintain an enhanced awareness of their clients’ interest and protection,” explains Cheng. 

“They must consistently present the right ideas to clients, seriously taking into account the relevant risk profiles of those clients.”

Serving the mega wealthy

This is perhaps most relevant for the ultra wealthy, which is an increasingly important target segment for BNP Paribas Wealth Management.

In line with this, the bank is rolling out a new initiative, Mega Wealth, to focus on the wealthiest individuals. 

This follows on from the success that the private bank has found over the last few years in on-boarding billionaire clients. Indeed, it has reached a penetration rate of 17% in Asia, and close to 50% in Hong Kong.

“This client segment calls for a holistic banking approach, integrating investment banking and wealth management solutions,” says Cheng.

For example, this demands specific credit solutions as well as private investment opportunities as two of the key drivers of the initiative. “The billionaire segment is our strategic growth lever,” adds Cheng.

“BNP Paribas Wealth Management is gearing up its value proposition to this segment, in order to remain as the preferred partner to this increasingly-important population of clients,” she explains.

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Jun 2016

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