The bank is doing well in its wealth segment.
Analysts at Maybank Kim Eng are positive on OCBC's wealth platform, customer-centric approach and digitalization efforts. As at 1Q17, operating profits for its global consumer/private banking segment formed 29% of total operating profits and rose 49% QoQ/43% YoY.
Here's more from Maybank Kim Eng:
Transformation started to show results
OCBC’s change in its approach from product-centric to customer-centric (i.e. providing solutions/goal-based advisory) started in 2015. Since then, the bank has inculcated this value into its employees and has started to see results.
Currently, 36% of sales come from OCBC Life Goals, which is a customized programme to help customers reach their financial goals for retirement, children’s education, and wealth transfer.
As compared to 18 months ago, 20% of sales came from the goal-based advisory process. As OCBC continues to expand its products through omni-channel efforts, it expects 50% of sales to come from this process in the next 12- 18 months, and 67% (i.e. 2 out of every 3 customers) in the long term.
Wealth platform well-positioned
We believe OCBC’s wealth platform is well-positioned for cross-selling efforts and product tie-ups across its franchise. For example, some Bank of Singapore’s (OCBC’s private banking arm) products could also flow to the bank’s premier and consumer banking segments.
Digital investments to rise
To engage customers more efficiently, OCBC has invested in technology, such as voice biometrics and artificial intelligence. IT investments are essential to build the franchise, retain customers and/or lure new customers across all touch-points in the competitive consumer banking/wealth management space.
While this makes IT costs sticky, such investments can result in productivity gains and cost efficiencies. We currently estimate costs to increase by 3-4% from FY17-19E.
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