You've recently been doing some research into wealth management in Asia Pacific. What are the main findings of this research?
Jaffe: Firstly, the definition of wealth management differs not only from country to country, but also from bank to bank. Sometimes it's little more than a general retail banking service with a few more products and services added, while at others it can extend to a full-blown private banking relationship.
In Korea for example, one bank says it offers wealth management services for clients with assets of as low as $80,000. But other banks aim higher; Citibank does it for customers in Korea with over $4 million.
The confusion arises about the mix of products and advisory services offered, and between the emerging affluent and the ultra-high net worth. But in all these cases it's all about how you target specific segments that make sense for your bank and building a relationship with the identified customers.
What are the main trends you are seeing in wealth management?
There is a convergence of two models, the online self-service model and the advisor-centric model. There are also many data consolidation issues around wealth management. You can buy a technology solution to support this business, but we've found that a lot of project failures, particularly on the CRM side of wealth management, have come because the data wasn't available, or couldn't easily be integrated with whatever solution has been implemented. The integration part is obviously very important. In fact, I think getting this part of the business right should be an enterprise-wide concern, regardless of what kind of new technology implementation a bank is considering.
Do you have any examples of banks that have done well in using technology to address wealth management, whether it's an online service, or technology that is used more by advisors?
We found that one of the best examples is ICICI Bank in India, which has a specialised online service for non-resident Indians. Obviously as it targets an ex-patriot audience, the online channel makes sense. It has not only got the tone and look and feel of the service right, with a bit of a 'Welcome Home' theme, but it also offers very attractive services such as free money transfers back to India. This targets the Indian Diaspora in the US, Middle East and elsewhere who want to repatriate funds for their family, their savings, or perhaps just to take advantage of better interest rates.
The site also has a great customer service element in the 24-hour instant messaging to bank representatives, which is obviously helped by the fact that there is a thriving customer service and call centre culture in India. This works really well across the many time zones the target market is in, and goes a long way to building a relationship with the customer based on loyalty and trust. And once the bank has the customers hooked on the 24-hour service and free money transfers, it is also in a good position to get further high-value business from the customer such as mortgages and personal loans.
What about technology that supports advisors in the branches?
This is something we're seeing in Singapore with the likes of DBS, which has been investing in technology to support the personal bankers in the branch because these are branch-focused institutions. Local banks particularly have millions of customers who mainly interact through a branch. These are low-lying fruit for the bank and they need the tools in place to pick up on sales leads and push more high-value services whenever they can.
But for someone like Citibank, where the branch infrastructure isn't so big and generally the branch technology in place is pretty good anyway, it does make sense to go out and build a functionally rich wealth management portal. By doing this they can perhaps poach from other banks some of the affluent customers that are looking for more functionality and service online than their bank is currently providing.
Are these portals being successful in attracting high-net-worth customers, or have they been hampered by the market downturn?
These portals, such as Citibank's Citigold site in Hong Kong, are still perhaps a bit too new to really take off. But we are starting to see significant online banking usage in a number of markets - Australia, Singapore, Taiwan, Hong Kong and Korea. And this should lead to even more high-net-worth customers using the online channel, if not exclusively then at least in conjunction with more traditional advisory services.
In Australia, for example, internet penetration itself is over 50 per cent. And among those internet users, over 40 per cent are banking online. And in other key Asian markets between 20 and 25 per cent of all internet users are banking online.
