Why Asia's lenders are banking on wealth management
Banks in Asia are increasingly looking to tap into digital wealth management solutions to service the growing mass affluent market in the region.
According to Hong-Kong-based Quantifeed CEO Alex Ypsilanti, institutions in the region are realising that digital solutions to wealth management needs are allowing them to re-engage with a significant portion of their client base.
“Many institutions spend a lot of investment in acquiring customers, building brand and distribution, but only make revenue from 20 per cent of their client base. Digital product and service solutions can re-engage 80 to 90 per cent of their client base,” Ypsilanti told AB+F.
Quantifeed set up its business in the Asia-Pacific region four years ago and works directly with institutions to provide online wealth management products and services. Its platform includes portfolios of stocks, funds and other global asset classes as well as investment solutions based on thematic ideas.
“The penny dropped” for Ypsilanti and his co-founder Ross Milward when they saw the increasing trend to online wealth management products and services in Western Europe and the United States.
A hybrid offering
Citing names such as Betterment, Wealth Front and FutureAdvisor, they were impressed that such businesses could provide scale and customer service to “hundreds and thousands, if not millions of customers”.
Quantifeed has secured a number of clients including Hong Kong business SinoPac Securities and Singapore investment manager Jachin Capital.
“When we first began in the region, we had reasonably constructive conversations with institutions but there was a lack of urgency. Over the last couple of years, we are seeing a big shift and a growing momentum for digital wealth management in Asian banks,” Ypsilanti said.
While he acknowledged that businesses like Quantifeed could be described as robo advice or wealthtech, he prefers the description digital wealth management. The service is also more of a “hybrid” offering.
The technology is used to do the “heavy lifting” in areas such as opening accounts or portfolio rebalancing, however, clients can access advisers to help them with their portfolios, particularly as they grow their wealth. He also believes that the wealth management is increasingly moving towards a “wealthcare” approach.
“Just like healthcare, wealth management should be for everyone, not just the purview of a few. We talk a lot about how the growing middle classes are getting wealthier but they still don’t have access to quality advice at a reasonable price.”
Aussie banks lag
According to Quantifeed’s Australian-based senior executive for strategic partnerships, Graeme Brant, Australian banks lag their Asian peers in embracing the digital wealth opportunity for affluent clients.
“In contrast to Asian financial institutions, Australian banks don’t feel the urgency to get the solution out tomorrow,” Brant said. “They are, however, thinking about the opportunities and whether to build a product or service themselves or partner with a business like Quantified.”
He believes that Australian banks already have well established wealth management business and so “have the luxury of seeing how the industry develops”.
According to RFi Group research, there has not been much in the way of partnerships with fintechs and banks in offering digital wealth management solutions.
However, there is appetite in the market amongst consumers. Around one in five in the market would find online wealth management appealing, with over a quarter of Gen Y interested.
The RFi research also found that appetite for digital wealth management increased as people build up assets ($50,000 to $200,000 in investible assets), but drops off for those with a larger amount of investible assets (over $200,000 in investible assets).