Singapore conquers wealth management in Asia

The status quo in the private banking and wealth management industry is changing as the focus shifts to client service and value delivery, according to a new PwC report published today. The report -Anticipating a New Age in Wealth Management - includes findings from PwC’s 2011 Global Private Banking and Wealth Management Survey.

Dominic Nixon, Asia Pacific Financial Services Leader, PwC LLP Singapore, said:
“New competitors are challenging the dominance of established private banking players. The impact of new regulations and more demanding client expectations are forcing private banks and wealth managers to change their client service infrastructures and the way they operate. Those who can master change will be in a position to win increased market share and lead the industry.”

Some highlights:

Today’s client is cautious, smart, less loyal and expects excellent service and clear value. Regulation has become the not-so-invisible hand, increasing the cost of operations. Greater operational efficiency and effectiveness are required, not just to compete but to survive Standing still is no longer an option and institutions must now quickly adapt or face being left behind.

In its 2011 biennial report, which surveyed a record 275 institutions from 67 countries, PwC found that wealth management continues to be a lucrative business with untapped potential for significant growth if institutions can be agile in adapting to meet changing demands.

PwC’s survey found that the industry faces multiple pressures in the following:

Performance and Change
Private banks by and large are facing challenges to achieve the desired performance, and there is wide divergence across the industry. Cost and regulations are the new drivers of change, but securing sustainable revenue growth especially from emerging markets will be the key to the future. In our survey:

Wealth managers’ average cost-to-income ratio remains stubbornly high, 28 percent of respondents reported cost-to-income ratios of less than 60 percent, while only nine percent also achieved revenue growth in excess of 10 percent.

Only 13 percent of organisations rated themselves as high performing in terms of transformative change; however, fully 42 percent aspire to higher levels of performance in the coming years.

Respondents see new competitors emerging and more than 30 percent expect significant consolidation over the coming two years.

Justin Ong, the Asia Pacific Leader for PwC Global Private Banking and Wealth Management , said:

“Participants believe the centre of gravity for wealth management is moving, and established centres are under pressure from emerging markets. In response to increased regulatory pressures, our respondents see Switzerland, London and, to a lesser extent, New York, all being challenged by the rise of Singapore and Hong Kong in the coming two years. From an Asia -Pacific standpoint, Singapore remains the preferred international financial centre among the Asian private banks.