Private banks must focus on strong branding strategy to increase share in Asia’s booming wealth market

There are now more millionaires in Asia-Pacific than in Europe and their numbers are nearing that of North America. According to the latest Capgemini Asia-Pacific Wealth Report there are 3.3 million high net worth individuals (HNWI’s) in Asia Pacific with a combined wealth of US$10.8 trillion and these numbers continue to grow faster than in any other region.

This explosion of wealth is driven not just by the large HNWI populations in Japan, China and Australia but also by the fast growing HNWI markets like Hong Kong, Singapore, India and Indonesia.

Not surprisingly, you find scores of Private Banks setting up offices in the region, many of them in Singapore, mainly to tap the rapidly expanding Asian millionaire market but also to provide a catchment for wealth migrating from other regions.

The Private Banking business in Singapore has been buoyant with assets under management growing strongly to an estimated US$300 billion. So needless to say, the Private Bankers know their business and have been successful in building a strong growth trajectory.

That said, as the market has become more competitive, clients are demanding more for less and the operating costs continue to escalate. As margins erode and cost to income ratios climb, it is time for Private Banks to review their business models and differentiate with a strong branding strategy that can help in delivering a premium customer experience and in protecting margins.

However, what’s missing today is the distinct brand positioning that customers can immediately associate with a particular Private Bank. Behind their brand names most of them look and feel the same. In the hallowed tradition of Private Banks, they all have ritzy, teak-panelled offices, staffed by Relationship Managers in immaculately cut suits, and portray understated elegance and an aristocratic ambience.

They appear to be offering the same services to all HNWI’s. In fact even the claims they make sound the same: strong heritage, trusted manager of your wealth, protector of your privacy, and guardian of your inheritance.

To build differentiation and create a unique brand positioning, Private Banks can benefit greatly by taking a leaf out of retail banks and credit card units who have so successfully employed the power of branding and a marketing framework.

Take market segmentation. Many Private Banks continue to segment consumers based on a basic demographic: size of AUM’s (assets under management) rather than the customer psychographics: attitudes, behaviours and lifestyles, which can give strong emotional hooks to build relevant value in services and in communications.

A few years ago we went inside the affluent space in 8 Asia-Pacific markets -- via wine and dine focus groups with HNWI’s and their service providers -- to better understand their psychographics. And the results were revealing. Affluence and luxury means widely different things depending on several factors: where they are on the wealth curve, whether the wealth is inherited or new money, and the connection between their business and private wealth.

Unlike in Europe where inherited wealth is significant, the bulk of the wealth in Asia-Pacific represents new money created by entrepreneurs who are still in the business investment and wealth creation stage. This in turn shapes their aspirations and attitudes which then define what luxury means to them and how they want to manage, preserve and grow their wealth.

Agreed, insights from consumer research are not easy to collate for the HNWI segment. However, innovative approaches like the wine-and-dine sessions mentioned before make it possible for a Bank to own this unique information “asset”. These insights serve as a strong platform for building a customer experience that is relevant to their lifestyle.

Moreover, a truly customer-centric approach can be very effective in identifying need-gaps of these segments, in developing truly tailor-made value proposition and customizing communications based on customer’s lifestyle passions and interests.

Take the young millionaire segment in Asia. It is not one homogeneous group: there are those who like the vibrant, luxurious lifestyle, gourmet dining and fun nightlife and then there are those in the fast growing YAWN (young and wealthy but normal) segment who lead a more “normal” everyday life. They would rather spend time with their families and focus on charitable causes than go partying with friends.

Engagement, loyalty programs and communications need to be built around the lifestyles of the wealthy. The affluent today are digitally savvy and like to devour their information and services via their iPad, iPhones and Blackberrys. Offering services and communications via social media, within the regulatory framework, is therefore getting increasingly crucial. Not sure how many Private Banks provide services to such customers where and when they want them: on their digital devices, when they are on the move.

New insights, a psychographic approach and a customer-centric strategy will also get Private Banks to re-think their long-held belief in a low-profile, hush-hush approach in keeping with the “Private” tag. Today, uber does not necessarily mean not having a public profile. Don’t believe me? Check out BMW, Dolce Gabbana, Lancome and Belvedere on Facebook. Banks can similarly get their brands in conversation in appropriate circles. American Express Centurion has done it for years and still retained the mystique, so essential in selling a luxury experience.

The outlook for the Private banking sector in Asia continues to be bullish. Those Banks with a strong branding strategy, a differentiated product offering and a premium end-to-end customer experience will ride the crest of the wave and win market share.  

Sujit Mittra, Managing Director, 360⁰ Marketing Consultancy
360⁰ Marketing Consultancy is a Singapore-based firm that offers Strategic Marketing, Reputation Management, Public Relations and Branding solutions for a broad range of companies in Asia including banks, premium financial services, luxury & lifestyle, travel and hospitality.