Thailand's wealthy are the target of a new digital push
Country’s wealth market is estimated to be US$300 billion with over 30,000 high-net-worth individuals
While Britain, France and the Netherlands carved out and colonized large swathes of Asia, Thailand never fell to the European colonial expansion.
As a result, for wealthy Thais, there was no dotted-line or imperial connection to a European capital. As a result, wealth management and offshore legal hubs such as London, Zurich or the Channel Islands have never witnessed a steady flow of Thai wealth looking for an offshore haven.
The kingdom also managed to avoid the march of communism that seized neighbouring Vietnam, Laos and Cambodia, enabling it to accrue its wealth without physical and social infrastructure being razed.
However there is a regularity to military coups in the country which is an understandable motivation for a new generation of wealthy Thais to now more willingly diversify their investments.
According to the 2017 Global Wealth Report by Boston Consulting Group, Thailand’s wealth market is estimated to be around US$300 billion. The population of high-net-worth individuals in the country is also on the rise and numbers in excess of 30,000.
As a result, wealthy Thai clients are demanding a more sophisticated approach in terms of structured asset allocation and access to global platforms with a full range of financial and investment solutions across asset classes.
In recent years, Thailand has been a magnet for Swiss private banks looking for newer fertile hinterlands away from the overbanked Singapore and Hong Kong markets. Julius Baer, Lombard Odier and Credit Suisse have all rolled out their services to the Thai wealthy.
Lombard Odier was first out the blocks in 2014 when it inked a memorandum of understanding with major Thai lender Kasikornbank.
Geneva-based Lombard Odier manages global investment funds on behalf of Kasikornbank’s private clients in return for a management fee. Under a separate arrangement, the Swiss wealth manager also acts as an exclusive offshore custodian for the bank’s clients, using Singapore as a booking centre.
Kasikornbank clients with assets under custody in Singapore get access to Lombard Odier’s network of private banking experts and the Thai bank refers high-net-worth private clients to Lombard Odier. The Swiss firm also provides advisory training for the Thai bank’s relationship managers and financial advisors.
In March 2018, Julius Baer announced it had established a strategic joint venture with Siam Commercial Bank to tap into the burgeoning Thai wealth market.
The joint venture operates via domestic and international companies in Thailand and Singapore, respectively, and provides a global wealth management proposition for Thai clients.
Zurich-based Credit Suisse took the direct route and went all in by opening onshore in Bangkok. It established a client relationship team in Thailand through its securities entity Credit Suisse Securities (Thailand). Covering clients across the nation, it offers access to a comprehensive international investment and wealth management platform via its regional private banking hub in Singapore.
Credit Suisse’s wealth management setup in Thailand targets two key client segments: high-net-worth individuals with more than US$2 million in assets under management (AUM), and ultra-high-net-worth individuals with US$50 million in AUM or US$250 million in net wealth.
With the first wave of international private banks having established bridgeheads into the Thai wealth market, another phase of wealth management namely robo and digital wealth managers for the mass affluent is now gathering pace.
The Thai government, central bank and its financial regulator have welcomed the adoption of financial technology solutions. The trio have been working to accommodate blockchain solutions and a structure to regulate cryptocurrency/digital tokens.
Because of this a robust fintech ecosystem has emerged. While some fintechs are Thai versions of overseas digital solutions, local innovation is also making its mark in the banking and overall financial services industry.
According to the Thailand Business News publication, the country is now home to more than 140 fintech firms with about half of them new businesses.
As in other Asian jurisdictions, the next generation of Thai wealthy and mass affluent is happy to do their banking and make investment decisions on their mobile devices. They are also influencing the move towards more online wealth management.
As the mass affluent wealth grows in Thailand, fintech start-ups in the wealth management space are gaining serious traction. Finnomena, a crowdsourcing robo-advisor investment service, recently snagged US$10 million in a Series B funding round.
Finnomena offers wealth management products, financial advice, analysis tools, and investment information to more than 120,000 subscribers, and claims to currently manage about US$270 million in assets under management.
The company plans to have at least 100 million views per month on its platform and manage assets of US$3 billion by 2023.
The major Thai banks are similarly joining the digital wealth drive. Siam Commercial Bank subsidiary SCB Securities (SCBS) recently launched Thailand’s first robo-advisor employing artificial intelligence to manage investment portfolios.
The service comes with an automatic investment portfolio adjustment feature and requires only a US$100 initial investment. SCBS expects to gain 100,000 new accounts through this new digital platform in 2020.
While Singapore is often seen as the leading financial technology hub in Asia, the potential of Thai fintechs has attracted the attention of Singaporean banks.
Singapore’s UOB Venture Management, a wholly owned subsidiary of United Overseas Bank, recently led a funding round of US$31.2 million in fresh capital for Thai fintech Lightnet.
Bangkok-based Lightnet is a fintech that was established to promote financial mobility and inclusivity for the unbanked and underbanked in Thailand and the region using blockchain technology.
The firm is chaired by Chatchaval Jiaravanon, a family member of the wealthy Charoen Pokphand Group, one of the largest Thai multinational companies.
16 Jan 2020