A survey carried out by PricewaterhouseCoopers and released yesterday (Tuesday) revealed the ongoing strength of the Asian private banking and wealth management business. The survey asked private bankers and wealth managers from 29 institutions in Hong Kong, Singapore and Australia to predict their asset growth rates for the next three years. The average growth rate predicted was 15% each year, for each of the next three years.
In an interesting example of the latent bullishness of the private banking community, the respondents also predicted that the average overall market growth rates would be 10%. In other words, all the respondents believed that they would beat the market. Sound familiar?
The survey further revealed that despite ambitious growth plans, the private banks had ill-defined strategies for achieving that growth. With increasing competition for clients and staff, and downward pressure on fees, the authors of the study suggest that private banks need to differentiate their services more than they do at present.
"Focus is critical," says Mervyn Jacob, a partner in the financial services practice of PricewaterhouseCoopers in Hong Kong. "Setting clear priorities and being able to position the organization to take advantage of market growth - whether by entering new markets, developing unique products, retaining and developing existing clients or acquiring new customers - will be critical to success."
When it comes to hiring new bankers, some 75% of Hong Kong respondents and 65% of Singapore respondents said that they would poach from their competitors, whereas only 22% of Australian respondents said they would hire from their competitors.
Many respondents were acutely aware of the risks they run in private banking, in particular, regulatory risks and reputational risks. 60% of the Hong Kong respondents said that they would be upgrading their risk management processes in the next 12 months.
This strategy looks wise given that most of the respondents (67%) also said that China was their main target market for the next few years. With all the well-publicized issues of rich Chinese falling foul of the various authorities in Beijing, it will take brave bankers to go after that business.