How To Differentiate In Wealth Management In Australia-Pacific

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1 Innovation and Differentiation in Wealth Management Asia-Pacific An assessment of the ways competitors are seeking to differentiate themselves in the wealth management market place Reference Code: Publication Date: 06/2005

2 compared to USD2.4bn raised in Australian private equity funds accounted for 62% of this total, making Australia s private equity market the most dominant in the region last year. Thomson also identified Australia as the largest source of private equity investment in the region, with USD827m invested in 95 companies. China was the second largest investment market with USD82m invested in 51 companies. South Korea was the third largest, with US691m invested in 12 companies. In other markets where SMEs are seeing improved performance, but where there is currently little private equity investment, private equity could well be a growth sector going forward. Markets in this category would include Hong Kong and Singapore. Datamonitor (Published 06/2005) Page 17

3 Through the leverage of distributional strengths This section analyses the ways in which competitors around the globe have been leveraging their distributional capabilities to either better service their clients or to increase revenues. The section covers two examples of competitive innovation or differentiation in this area. Each case provides Datamonitor s Wealth Team s View of the product and its applicability to the Asia-Pacific region. Singaporean banks are leveraging their branches for premier customers There has been much discussion in the past about how the branch could be a key vehicle for selling to affluent consumers. This view was based on the premise that higher-value products are more appropriate for customers with higher incomes, and that these products need to be sold accompanied by face-to-face advice. This advice can only be provided at a branch. Yet, the problem with this view is that the most affluent customers also tend to be the most financially knowledgeable. As such, they require less hand-holding than customers in lower income groups and prefer to purchase products and conduct ongoing product servicing online or via the call center, visiting the branch only as a last resort. Although banks are able to extract considerable value from affluent customers each time they visit a branch, since they do not visit a branch that often overall sales potential is constrained. In the affluent space banks therefore face a different challenge than in the mass market. In both markets the focus is on extracting more value from every branch interaction. However, while the focus in the mass market is on lessening the frequency of interaction the focus in the affluent market is on increasing it. In an attempt to extract maximum value from their affluent customers some banks now operate branches specifically for this segment. Globally, branch provision for premier banking customers can be seen to be most extensive in Singapore. In Singapore, where Datamonitor estimates there are almost 140,000 premier banking eligible individuals defined as those individuals with between SGD200,000 (USD120,000) and SGD1,000,000 (USD600,000) in investible assets branch provision for premier banking clients is extensive. Domestic and international banks Datamonitor (Published 06/2005) Page 32

4 While the online channel may not be the crux of the wealth management proposition its does offer the potential to achieve a degree of competitive differentiation if it can be harnessed as an effective lead generation tool and used to improve communication and transparency between client and institution. The most important factors for wealth managers to consider when assessing their ability to differentiate through the use of the website are: The purpose/objectives for the website Will the website be used as a marketing tool to inform current and prospective clients, as an advice channel as part of a wider offering or as the basis for a wealth management proposition? The services available Will the website have just basic technology and online banking, will it offer access to online stockbroking or wrap technology? The nature of the client base and customer orientation Are clients likely to want to use Internet services or are they likely to be happier with traditional face-to-face services? Applicability to Asia-Pacific: The analysis of global and regional private banking websites has very definite implications for the wealth managers in Asia-Pacific. Many of the local players fall into the trap of having a website purely because other competitors have one. As a consequence, these websites are often of little or no value, have zero functionality and contain only the minimum amount of information. In order to qualify the above statement, Datamonitor took a closer look at the websites of the local and regional wealth managers in Asia-Pacific. From Australia, ANZ Private Bank, Commonwealth Private Bank, National Private Bank, St. George Private Bank, and Westpac Private Bank. From Singapore, DBS Private Bank, OCBC Private Bank and UOB Private Bank. It is not relevant to compare these banks against the global and regional banks, so they have been benchmarked against each other across six criteria each scored out of five: Ease of access of the website can it be easily found from the main banking site? Differentiation from main site does it have separate branding? Exclusive/ affluent feel does the site give the impression of exclusivity? Datamonitor (Published 06/2005) Page 40

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