Articles

Asian private banking strategy – what works in Asia?

Alex Jagmetti of Falcon Private Bank looks at how institutions entering the industry in Asia are positioning themselves to capture market share, and explains what is likely to be the most effective approach.

Date: Jun 2011

Tags: Growth, Differentiation, Value proposition, Hiring

  • For many small- or medium-sized players, even if they manage to only get 0.2% of the market, that would probably double their assets under management
  • For private banks to be effective in Asia, they need to be able to clearly and honestly articulate what they can do – not try to be everything to everyone
  • Being more focused and more targeted can lead to a higher success ratio
  • A real sign of commitment by banks to the region is whether they genuinely try to understand the market, rather than try to impose their own ideas or visions

According to Alex Jagmetti in an interview, a lot of market entrants in the Asian wealth management space seem to look at headline figures in relation to numbers of wealthy individuals and regional GDP growth, and then base their strategies on this to try to get a small piece of the pie.

For many small- or medium-sized players, for example, even if they manage to only get 0.2% of the market, that would probably double their assets under management from the group perspective, he said.

At the same time, the market in places like Indonesia, Malaysia and Thailand is overbanked, with a lot of players offering similar things, said Jagmetti. So just hiring a few relationship managers and trying to differentiate by having an open platform or a product specific to the organisation doesn’t tend to work.

Neither, he added, does the approach of European bankers coming to Asia and teaching people what the industry should really be like.

An effective strategy for Asia

In Jagmetti’s view, for private banks to be effective in Asia, they need to be able to clearly and honestly articulate what they can do – not try to be everything to everyone.

They need to be able to define their client segments and geographies, as well as make sure that what they have already, and can develop within a reasonable timeframe, fits the needs of the market.

At Falcon Private Bank, for example, Jagmetti said the firm is not hiring massively and doesn’t have hiring targets for specific markets.

Instead, it is looking at what it can really do better than somebody else, and the sort of people it needs to meet clients’ needs. While this might limit opportunities to an extent, being more focused and more targeted can lead to a higher success ratio.

Commitment to Asia

Amidst the rush of market entrants and associated spending sprees on building an Asian private banking franchise, Jagmetti said a real sign of commitment by banks to the region is whether they genuinely try to understand the market, rather than try to impose their own ideas or visions.

Ultimately, he said, many market players are just committed to making more money. What is often lacking, however, is trying to really understand what makes various markets tick and what the expectations are, and then shaping the business accordingly – without confronting clients and potential employees with arrogant statements or projections.

As a result, commitment isn’t just throwing money at Asia as a percentage of a bank’s overall spending budget because most institutions have done that, he explained.

 
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