Asia's wealthiest banking clients are open to the concept of paying more for the best financial advice, and niche wealth managers are increasingly winning their hearts and wallets, according to Silvio Struebi, Asia-based partner with global strategy consultants Simon-Kucher & Partners.
He says the region's ultra-high net worth individuals (UHNWIs), many of whom are multi-banked and have assets spread across borders, increasingly require sophisticated structuring solutions to address their complex financial needs.
Struebi also sees a growing willingness of these individuals to remunerate their trusted advisors for advice. To exploit this opportunity, banks need to focus on this changing attitude. But conversely, he thinks that banks are not moving quickly enough to capitalize and focus on the gains that can be derived from this opportunity.
Globally, wealth managers are under immense pressure to continually accrue new assets and revenues, leaving less time for those in client facing roles to focus on deepening relationships. The result is that many of the largest players look and feel the same.
Struebi says it could be argued that wealthy clients in Asia are unable to truly distinguish one large private bank offering from another.
"First of all, from my point of view, they should have certain differentiators. However, differentiation also requires focus and could potentially dampen growth in the short run. Most banks don't really have time to calibrate a clear focus and strategy," says Struebi.
He is of the opinion that the two demands can go together and points out the marketing campaign and focus of Bank of Singapore, the dedicated wealth management arm of Singapore's OCBC Bank, as one successful example.
On the other hand, in the past few years the boutique and independent asset managers have moved quickly to clearly differentiate their products and services. With fewer clients, they have the luxury of being able to offer more time for regular tangible and meaningful contact.
Despite the healthy marketing budgets, Struebi thinks that many banks have a sales and communication issue. "They do a lot of very good things, but when it comes to marketing and how they sell their offerings, there's significant room for improvement," he says.
He cites the example of Apple and how they hype the launch of a new phone by simply adding a couple of features and yet, customers are willing to pay a large amount of premium to have the latest model.
He points out that the largest banks, on top of offering wealth management, can also offer additional high-value services such as complex financing solutions, access to investment banking or global markets for their larger clients. These services are, however, often not marketed in a way that is really appealing to customers, or simply given away for free. The pitch documents, brochures and communication material, for instance, look similar because the bank's competitive advantages are not visible enough," says Struebi.
"That's actually what banks should do; they should focus on their wow factors," adds Struebi. "They need to be better at highlighting their unique selling propositions, what they are standing for, and what they can offer," he says. "Just winning by being the cheapest bank is not a sustainable strategy."
When it comes to introducing innovations into the Asian wealth market, he also sees the Asian banks, the independent managers and even fintechs as becoming increasingly prominent in the market.
Perhaps with the exception of Swiss bank Credit Suisse, who developed a propriety financial technology in Asia and exported it to its global associates, Struebi says that for most global players, Asia is not the priority market.
According to Struebi, the Asian market is not always the most central one. "That's why, when they innovate IT and systems, they often do it within their core market first, and afterwards export it to Asia," he says.
"For local banks in Asia, the innovation is driven by the retail banking area," Struebi says. "They have the budget, there are a lot of clients and they have the scale, and so they will invest, then take this and adapt it to their private banking unit," he adds.
For mid-sized private banks in Asia, that is just not feasible given their current size.