Alvin Lee says customers' private banking experience will be more driven by automated channels.
Alvin Lee, head, group wealth management at Maybank, has more than 23 years of experience across wealth management, corporate, consumer banking and treasury. He has worked with banks such as Burgan Bank, Citibank, Barclays, as well as JP Morgan. He has spent time working in Asia, Europe, Africa and Middle East.
This strong track record helped Lee to lead Maybank Private Wealth to success despite being established for only 3 years.
In an exclusive interview with Asian Banking and Finance, Lee talks of the trends and challenges in the wealth management sector as well as the customers' changing preferences.
ABF: As Asia leads the way in global wealth creation, what trends to you see arising in the private wealth management sector in the countries you cover? What are the most pertinent challenges?
Asia Pacific as an economic bloc will very likely overtake North America as the wealthiest region in the world within the next 2 decades, if not sooner. This is driven by several factors including the continuing expansion of the 3 most populous countries in Asia – China, India and Indonesia, the opening up of developing economies within ASEAN which will benefit from investments in in-country infrastructure and the transnational One Belt One Road initiative.
All of the above will lead to wealth creation not just amongst the high net-worth individuals but middle-income families as well. Banks with their key long-term strategy centred in Asia will continue to grow their wealth management capabilities.
Maybank is uniquely placed as the one bank with presence in not only all 10 ASEAN countries but also other key financial centres like Shanghai, Beijing, Hong Kong, London and New York. Our business footprint together with our comprehensive capabilities as a Universal bank enables us to meet and deliver our clients’ spectrum of financial needs.
However, there are also developments that will pose challenges to banking. In particular, wealth management will have to contend with three keys issues of regulation, competition and digitalisation.
Increased regulations will make the cost of compliance higher and cost of non-compliance even more so for banks. Tighter regulatory requirement will necessitate banks to review and implement controls around know your customer (KYC) and anti-money laundering (AML) risk disclosure, cross-border funds transfer, amongst others. At the risk of contradicting my earlier point about economies opening up, increased regulations will have a direct and indirect impact on cross-border business. Banks with onshore presence in relevant markets will therefore be in a relatively stronger position to compete and to better serve clients.
The second challenge that banks will face is competition. While several Europeans banks have scaled back their wealth management and private wealth business, competition remains keen as Singaporean and Chinese banks are investing heavily in this segment. Competition also comes in the form of non-traditional players such as family offices, independent financial advisors and even asset management companies which offers products directly to investors. This will likely lead to increased strategic partnerships between banks and these non-traditional players.
As information technology gets increasingly entrenched in our daily lives and affects almost everything we do, digitalisation will also revolutionise financial services. In wealth management, gone will be the adage that a wealthy person will only want to deal with a banker instead of machines. With increasing digital adoption by people from all walks of life, banks will have to incorporate mobile financial services as a core part of their offerings.
ABF: How is the wealth management sector affected by the great push towards digitisation and the rise of fintech across the financial services industry?
With growing use of mobile digital devices, not only do people have instant access to information, they have come to expect services provided by banks to be timelier as well, also in the area of wealth management. Due to increased digitisation and the rise of fintech, wealth management players need to incorporate digital solutions into their strategy and proposition to clients. It will change the way banks serve their clients and the pricing of services.
ABF: How have the customers' private banking experiences and investment preferences evolved in Asia, especially with the emergence of new technology such as robo advisors?
Traditionally in Asia, customers tend to set aside a bigger percentage of their incomes as savings. They prefer investments in real assets, with property as a favourite asset class, and if they are into active investment, many would prefer to make their own decisions instead of relying on professional fund managers to do it for them.
There is however a shift in mind-set and customers are more willing to delegate their investments to family offices and through discretionary portfolio management. Technology has also impacted customers’ investment behaviour. With easier access to trading platforms on the go as well as a reduction in transaction costs, trades are made more frequently and the holding period has become shorter. They also come to expect instant access to their portfolio balances and performances.
Customers’ private banking experience will gradually shift from being a high-human-touch service to one which is more driven by automated channels. While they will continue to have face-to-face encounters with their bankers, when it comes to day-to-day trading and investment activities, they will expect to be able to do it via technology.
ABF: What are some of your notable milestones in the past 3 years since the establishment of Maybank Private Wealth? What factors do you think spurred these achievements?
It's been a fantastic journey first building and then operationalising the business. We now have a platform, team of professional Relationship Managers and the strategy to be a sustainable and viable business. If I have to list specific milestones, it will firstly be our ability to have generated consistent returns above benchmarks for each of the past 3 years. Secondly, as a new business unit, we are enhancing the Maybank Group’s proposition as a Universal Bank. And thirdly, we have been able to meet most of the financial KPIs that help to create shareholder value.
One first key success factor is a conviction that this is a segment that we as a bank want to be in. Both Maybank’s Board of Directors and Group Executive Committee are extremely supportive in this business which allows us to have the resources to make the necessary investments in capabilities and the people required to build a strong business.
The second factor is people. Wealth management is a knowledge-based business and having competent people with the attitude towards servicing clients is critical. Having the right work culture that allows employees from front to back offices to hone their skills to bring value to clients ensures we have a team of engaged and productive bankers.
ABF: What are your growth strategies/targets for the next 3 to 5 years?
Given our view that affluence level in Asia will grow and for regulatory requirements to tighten, our plan is to continue to improve our proposition and platform, increase bench-strength, and carry on helping our clients in their needs, and very critically doing all of the above in complete adherence to governance standards.
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