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Citi appoints Global Wealth Co-Heads in Asia Pacific

Fabio Fontainha

In late January 2021, Citi unveiled its new wealth management unit “Citi Global Wealth” – unifying the group’s Consumer Banking’s retail wealth management business and the Institutional Clients Group’s Citi Private Bank. Leading this newly formed unit is Citi veteran – Jim O’Donnell.

In line with the above announcement, Citi’s made key appointments in Asia’s wealth management franchise. Fabio Fontainha and Steven Lo have been named as Co-Heads for Citi Global Wealth in Asia Pacific. Fabio Fontainha and Steven Lo will directly report to Jim O’Donnell and Citi’s Asia-Pacific CEO Peter Babej. Further, Fabio Fontainha will also join Steven Lo on the Asia Pacific Operating Committee. Citi currently ranks as a top three wealth manager with approximately US$300 billion in assets under management (AUM).

In an internal memo, Peter Babej highlighted the bank’s vision for and commitment to the region. “The scale and growth prospects, driven by the emergence of a vast middle class and the rapid development of regional capital markets stands out for the Asian Wealth management sector”, noted Peter Babej. Further, he also added that the bank’s “industry-leading talent, distinctive global network and broad product platform, makes it well positioned for market leadership.” The group witnessed record net new money inflows of over US$20 billion across its regional franchise, spanning consumer banking wealth management as well as the private bank in 2020.

Steven Lo

As prime market for wealth management, Asia has been on Citi’s radar as the bank is focused on winning in wealth in the region. A testament to this is when Citi opened the largest wealth hub globally for Citi in Singapore last year. It also announced plans to double AUM by 2025 in the market and triple number of clients in the same period.

In the recent times a number of institutions have focused on growing or expanding to Asia-Pacific due to ideal market conditions, favourable demographics and various other factors. BCG’s Global Wealth Report 2020 highlights scenarios where Asia ex Japan Wealth is expected to grow from 5.1% to 7.4% under different recovery scenarios in the next 5 years – leading the growth trajectories for North America and Western Europe. In line with this, Asia is will be the fastest growing wealth region under all scenarios.

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The New Landscape in Private Wealth Management

The New Landscape in Private Wealth Management

Private wealth management has been undergoing a massive transformation. In large part, because of the rapid technological innovation that has been going for the past couple of years, but more significantly, as a result of the strict measures being implemented by various governments to combat the pandemic. In this insightful interview with Masroor Batin, CEO Wealth Management – Middle-East & Africa (MEA) at BNP Paribas Wealth Management, he spoke about the new landscape in private wealth management, the trends in inter-generational wealth transfer and the role of digital in investments and meeting client expectations.

Global Private Banker: How was 2020 as a year for BNP Paribas Wealth Management across MEA, and what are you hopeful for over 2021?

Masroor Batin, CEO Wealth Management - Middle-East & Africa (MEA) at BNP Paribas Wealth Management

Masroor Batin, CEO Wealth Management – Middle-East & Africa (MEA) at BNP Paribas Wealth Management

Masroor Batin: We will all remember 2020 as the year of Covid-19. The different waves of the pandemic and lockdowns resulted in the fastest and deepest recession on record. At BNP Paribas Wealth Management MEA, we adapted our platform in just a few days to allow remote working while continuing to serve our clients. We also enhanced our digital capabilities to better engage with our clients since we were no longer able to meet them in person. It was firm proof of our agility to adapt.

Apart from the pandemic, by all metrics, 2020 was a very strong year for BNP Paribas Wealth Management MEA. We grew our teams notably on the coverage side; we enhanced our new client-centric commercial organisation; our clients entrusted us with significant net new cash (+$1Bn vs. 2019) and we closed remarkable transactions. More importantly, we focused on being even closer to our clients so we could serve them even better during this turbulent time. Our recent awards including “Best Private Bank in the UAE” given by your magazine, as well as our client satisfaction surveys, are a strong testament to our commitment that drives us every day as a company.

In 2021, we will continue our efforts in this regard, and we will ensure that we closely accompany our clients in their investment decisions and in their ambitions. We are also cognisant of the global challenges we are facing such as transitioning towards a sustainable economy. Today BNP Paribas Wealth Management is a recognised leader in the field of sustainable investment solutions, and we aim to continue meeting this growing demand from our clients for responsible solutions.

Many experts predict that around $30Tr to $70Tr will be passed down from the Baby Boomer generation to the millennial market in the coming decades, calling this the “Great Wealth Transfer.”

Global Private Banker: How is your firm approaching generational wealth transfer to the millennial market?

Masroor Batin: Many experts predict that around $30Tr to $70Tr will be passed down from the Baby Boomer generation to the millennial market in the coming decades, calling this the “Great Wealth Transfer.” This is very likely to be the largest wealth transfer in history. Within the Middle East, most of our clients are preparing for this transfer and we are already  accompanying them with our award-winning Wealth Planning team. Within BNP Paribas Wealth Management, we also organise Next Generation Seminars, dedicated to children of UHNWIs, which educate this generation on all aspects of this wealth transfer including the necessity for long-term strategic planning.

Finally, we clearly see a great acceleration in the uptake of socially responsible investing across all demographics, and notably among millennials. According to our 2020 BNP Paribas Global Entrepreneur report, 70% of entrepreneurs globally are more willing to invest sustainably than 2 years ago. Millennial entrepreneurs have even stronger ambitions: they are willing to invest as much as a fifth of their investments responsibly by 2021. We have integrated sustainable criteria into our core offering and we will take into consideration our clients’ risk/return and sustainability profile when we propose the investment solutions that match their values and their ambitions.

Global Private Banker: What is your outlook on the impact of COVID-19 on the private wealth landscape over the next 12-24 months, and what critical measures has your business taken to navigate these waters?

Masroor Batin: First, our clients are asking for more advice. In a rapidly changing environment, which is by its nature unpredictable, providing our clients with regular (sometimes daily) market updates and with easy access to market experts, becomes essential. We believe that banks with strong global and local expertise and tailor-made capabilities will have a strong competitive edge in this context, which is most certainly the case for BNP Paribas. For example, we published our 2021 Investment themes, they are grouped by investment horizon, from short term to long term but also looking at key areas such as sustainability, and we believe that these themes will be key for driving our clients’ investment ambitions.

Second, clients are looking for diversification, both in their investments and for their wealth managers and they now favour international players with strong solvability and liquidity ratios. This is clearly a driver at BNP Paribas! Again, we have seen an increased interest in our firm due to its size, its diversified model and its solidity.

Finally, the digital journey has accelerated both internally and externally, and we have launched new ways of engaging with our clients and our teams.

I strongly believe the measures, which we have put in place during these exceptional circumstances, like today, won’t go away when the crisis ends. They will become our BAU.

Global Private Banker: What are some of the digital capabilities your firm is investing in, as a result of changing client expectations?

Masroor Batin: There is nothing new that clients expect innovation from their wealth manager, and we have been investing in our digital capabilities for many years. It is probably too early to say definitively how the past few months events will shift client expectations, but we believe that there will be a significant transformation, putting on banks a responsibility to accelerate the digitalisation of the client experience.

For example, while physical interactions have always been central in our relationships with our clients, clients are much more open to digital interactions with us. This is definitely the result of the months of lockdown situations and travel restrictions.

To answer these new expectations, we continue to enhance our client journeys, notably in the areas of advice, portfolio management and communication. We have been leveraging during the last years on digital to make the client experience smoother and more personalised.

We believe that banks with strong global and local expertise and tailor-made capabilities will have a strong competitive edge in this context, which is most certainly the case for BNP Paribas.

Global Private Banker: Which Wealth Management FinTechs have caught your eye of late?

Masroor Batin: Globally, we have partnered with top FinTechs in their respective fields of expertise, notably through our  digital factories in Europe and Asia. Recently, we partnered with Gambit, a Belgium FinTech active in robo-advisory technology, to build a digital investment mandate for some of our clients. To give you another example, we are also currently working with DreamQuark, a deep learning platform, which has been accelerated in our BNP Paribas Plug & Play accelerator program in Station F in Paris.

Global Private Banker: How does BNP Paribas Wealth Management in the Middle East differentiate in a highly competitive landscape, and what would you say is your unique value proposition?

Masroor Batin: Without any doubt, it is our One Bank integrated approach, which is at the heart of our value proposition. It allows our Wealth Management clients to benefit from the not only our expertise, but also from all the expertise within the BNP Paribas Group, which is truly unique in the banking industry. For example, our clients can benefit from our Real Estate business, Asset Management, Personal Investors, Securities Services, Islamic Finance and Insurance to name a few. And of course, there is our very unique international footprint.

We are “the bank for a changing world” and to be so, we must understand the world, its changes, opportunities and challenges. This is our uniqueness.

>> To read more about this story and other exclusive features about the private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

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Image: Robson90 / Shutterstock.com

 

BNP Paribas’s holistic approach

BNP Paribas’s holistic approach to transaction banking unlocks value through innovation and collaboration

Noticeable changes in Asian economies have allowed global transaction banks to  demonstrate significant transformation. In a market as dynamic and fast-growing as Asia, BNP Paribas maintains a strong foothold with presence in over 13 markets. Further as business models transform, BNP Paribas along with its clients  is set to embrace the faster shift favouring e-commerce and online sales. Mahesh Kini, Head of Cash Management, APAC at BNP Paribas noted “transformation has now taken priority and clients are rapidly developing the ability to meet consumer demand using digital channels.” Present across major hubs and emerging ones, BNP Paribas prefers to remain as accessible and close to their clients as possible.

A full-service transaction bank

Mahesh Kini, Head of Cash Management, APAC at BNP Paribas

As a fast-moving and challenging landscape, the barrier to entry remains high in transaction banking as there is a significant technology cost involved to scale the business effectively. BNP Paribas has however made the necessary investments in various platforms over a decade ago and continues to have a strong appetite to further invest in various technologies in order to deliver on its clients’ latest requirements. Today, the bank cash management solutions suite is offered via variety of channels such as internet and mobile banking, host–to-host, SWIFTnet, EBICS and API protocols to further augment the clients’ banking experience.

While efficient measures and systems were put into place to improve and maintain liquidity, a crucial line of transaction banking – Trade Finance was drastically impacted by the pandemic. Largely a paper based business, “documentary credit and collection business in various parts of the world took a hit, including APAC which is an important region for documentary credit transactions, manufacturing and supply chain” noted Stephane Gaboriaud, Head of Trade Solutions, APAC. Subsequently, as transition to digital remains a prominent theme, trade document digitization has gained momentum. Edwin Chan, Head of Transaction Banking Product Management, APAC, noted that “document processing and handling was re-designed to meet Work-from-Home requirements while an accelerated shift towards end-to-end digital documentation is in the works.”

BNP Paribas takes on a collaborative, multi-layered approach to the growing players in the transaction banking space.

Using technology to build effective solutions

Stephane Gaboriaud, Head of Trade Solutions, APAC

Globalization has ramped up value chains and e-commerce activity while creating massive opportunities for technology companies and non-bank players in the global transaction banking space. BNP Paribas takes on a collaborative, multi-layered approach to the growing players in the transaction banking space. As a global bank with proprietary platforms and technology at its disposal, Mr. Kini emphasizes on this further by stating, “BNP Paribas consistently addresses pain point by collaborating with our corporate clients and partnering with Fintechs to find suitable solutions. Nimble FinTech gives us access to the latest technology and innovations, significantly reduce the time to market.”

Prominent themes of most conversation in banking revolve around extensive application of technology and digitalization of process and BNP Paribas sets itself apart by creating an agile and scalable ecosystem for its clients. Significant investment in technology and partnerships allow the bank to offer a dedicated customer service experience. Extensively leveraging APIs across its internal network, the bank is now set to extend its to its broader client base. Approaching one of the most common problems of invoice reconciliation, BNP Paribas is currently developing use cases by leveraging Artificial Intelligence and Natural Language Processing.

Fostering relationships via collaborations

Edwin Chan, Head of Transaction Banking Product Management, APAC

With successful collaborations with FinTechs such as CashForce on cash forecasting, and LianLianPay in China which enables the bank’s clients to access Alipay, WeChatPay, UnionPay networks, while playing an active role in ecosystems such as Contour – a decentralised, digital trade finance platform, and eTradeConnect to guide market practices to move towards digitalization, BNP Paribas has demonstrated exceptional client services by building relationships and going the extra mile to support them and protect their interests in a complex and evolving environment.

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>> Read more exclusive features about retail banking innovation and the digital banking landscape. Download the latest issue of The Digital Banker Magazine HERE.

Decoding the Needs and Preferences of Asia’s Next Generation of Wealth Holders

Pushing Water Uphill in Asia – SDG6: Clean Water and Sanitation for All

By Arnaud Tellier, CEO Asia Pacific, BNP Paribas Wealth Management

 

A United Nations (UN) goal of providing clean water and sanitation for all by 2030 is proving to be challenging in Asia. What does this mean for the region and what is being done to ensure this most basic of human rights?

The World Health Organization (WHO) offered some simple advice as Covid-19 began to spread: Wash your hands. Hand hygiene was one of the most effective ways to limit the spread of pathogens and prevent infections, it said, including the new virus.

Being able to wash hands is taken for granted by many. For others, it’s not so easy. The United Nations estimates that two in five healthcare facilities globally lack clean water and soap. Nearly two billion people only have access to water that is fecally contaminated and almost a billion more lack access to basic sanitation such as toilets.

Much of the problem in Asia stems from rapid and unplanned urbanisation. More than 60% of urban households live without piped water supply, with the problem being most acute in Manila, Jakarta, Dhaka and New Delhi.

Clean water for all

Access to clean water and sanitation is widely seen as a basic human right. It has the power to alleviate poverty and hunger, improve health, reduce inequality of wealth and gender and improve standards of education. It offers people greater dignity in their daily lives: the World Health Organization (WHO) estimates that some 673 million people still practice open defecation.i

On a broad economic level, the World Bank estimates that poor sanitation resulted in a loss of about US$223 billion of global GDP in 2015. Asia and the Pacific suffered the most, with losses of about 1.1 per cent of GDP overall, and some nations losing more than 5 per cent.

While poor sanitation has significant negative impacts, it also provides an economic opportunity: the WHO estimates that for every dollar invested in water and sanitation, the return is four dollars through saved medical costs and increased productivity.ii

Most goals rely on SDG6

While the 17 Sustainable Development Goals (SDGs) goals are measured individually, none of them can be achieved in isolation and almost all rely in some part on the delivery of SDG6: “Ensuring sustainable access to clean water and sanitation for all.”

SDGs 1 to 3 (no poverty, zero hunger, good health and well-being) are clearly dependent on clean water and sanitation. There are less obvious links with Goals 4 and 5 (quality education and gender equality), but it is impossible to build decent schools without good sanitation and – in many of the world’s poorest nations – it is women who take responsibility for collecting and providing water for the family, keeping them out of schools and further increasing gender inequalities. The goals associated with climate change, energy and the environment are also connected with progress towards SDG6.

Bigger cities, bigger problems

A 2019 United Nations report on the SDGs presents a bleak picture for Asia. The region is failing to make progress on almost two-thirds of the SDG targets and none of the 17 goals look likely to be achieved.iii

Of particular concern was a lack of progress in reducing inequality, protecting oceans and taking action on climate change. In many countries, especially in South Asia, lack of access to clean water and sanitation is contributing to targets being missed, with the situation stagnating or getting worse in developing nations.

Much of the problem in Asia stems from rapid and unplanned urbanisation. More than 60% of urban households live without piped water supply, with the problem being most acute in Manila, Jakarta, Dhaka and New Delhi.

Various countries have proved that dramatic improvements in the provision water and sanitation can be achieved in just a few years, and that some solutions are inexpensive, effective and can be deployed quickly.

Asia: green shoots

Overall, though, Asian countries have made good progress in improving access to safe drinking water and sanitation over the past decade.

Only one per cent of the population now uses surface water for drinking purposes and around 92 per cent now have access to basic drinking water.  Between 2000 and 2017, the SDG regions of Central and Southern Asia and Eastern and South-Eastern Asia increased the provision of basic sanitation by 36 per cent and 24 per cent respectively.

There has also been a dramatic decline in open defecation in Asia since 2000, with more than half of the population of Cambodia, nearly half of the population of India and a third of the population of Nepal and Laos stopping this practice.iv

In spite of these encouraging indicators, progress towards SDG6 remains uneven within the region. According to the United Nations, relatively wealthy North and North-East Asia has almost achieved the 2030 target already, with North and Central Asia not far behind, but populous South-East Asia and South and South-West Asia were behind schedule in 2019.v

 

 

Delivering the promise

Recognising the challenges that remain, the United Nations recently launched a Global Acceleration Framework titled “Delivering the promise: Safe water and sanitation for all by 2030.”

The framework puts in place five “accelerators” designed to dramatically improve the international community’s support for SDG6. These include optimising the use of financial resources; improving the quality of data; improving capacity by increasing job creation in the water sector and the retention of a skilled workforce; developing and implementing new technologies; and improving governance through better cross-sector and international collaboration.

New initiatives

Various countries have proved that dramatic improvements in the provision water and sanitation can be achieved in just a few years, and that some solutions are inexpensive, effective and can be deployed quickly.

UNICEF has lauded government initiatives including China’s Toilet Revolution, Indonesia’s Sanitation Campaign, Myanmar’s Clean Villages initiatives and the Philippines’ Sanitation Master Plan for generating “huge traction in terms of drawing political attention for accelerating progress in sanitation and ending open defecation.”vi

New technology is helping, too. In Vietnam, dirty water from a canal in the Mekong River is treated at a plant using a chemical-free process developed by Akvotek, an Australian company. The energy-efficient system provides at least 400 homes and 2,000 people in the southern city of Ben Tre with safe drinking water today, and is expected to do so for many years to come.vii

Big companies are also looking to SDG goals for guidance in forming their sustainability strategies. Among many others, Dutch brewing company Heineken has made commitments to reduce its use of water. In Indonesia, it has established a cross-sector alliance with UN agencies and partnered with an NGO to replant trees and restore land that is critical to the water supply and flood resilience of 30 million people.viii

Delivering on SDG6 will not be easy for Asia. But there is hope that, with the UN accelerator framework in place and the region’s governments, businesses and communities increasingly focused on sustainability, the chances of delivering clean water and sanitation for all are increasing.

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

 

Notes:

i   https://www.who.int/water_sanitation_health/publications/jmp-2019-full-report.pdf
ii  www.who.int/water_sanitation_health/monitoring/economics/en/
iii https://www.unescap.org/sites/default/files/publications/ESCAP_Asia_and_the_Pacific_SDG_Progress_Report_2020.pdf
iv https://www.who.int/water_sanitation_health/publications/jmp-2019-full-report.pdf
v  https://www.unescap.org/sites/default/files/publications/ESCAP_Asia_and_the_Pacific_SDG_Progress_Report_2020.pdf
vi  https://www.unicef.org/eap/sites/unicef.org.eap/files/2020-05/EAPRO%20WASH%20Results%20Report%202019_FINAL.pdf
vii  https://watersource.awa.asn.au/business/partnerships/akvotek-achieving-sdg-6-in-rural-vietnamese-village/?utm_source=SocialAnimal&utm_medium=referral viii https://www.theheinekencompany.com/our-sustainability-story/our-progress/case-studies/tackling-water-stewardship-challenge-indonesia

Images: Jimmy Tran/Shutterstock.com | GODONG-PHOTO/Shutterstock.com

Decoding the Needs and Preferences of Asia’s Next Generation of Wealth Holders

Decoding the Needs and Preferences of Asia’s Next Generation of Wealth Holders

Before the outbreak reaches pandemic level early this year, Asia has been one of the most robust regions when it comes to wealth creation. From China to India to Singapore, Indonesia and beyond, the number of wealthy individuals in Asia, and the corresponding sizes of their wealth, is nothing less than astonishing. As soon as the pandemic hit, almost everything ground to a halt. Expansion plans were put on hold, internationalisation strategies were redrawn, and Asia’s wealthy families had to recalibrate their long- and short-term plans.

In a recent report entitled Banking, Entrepreneurialism, and the Next Generation of Wealth Holders 2020 by BNP Paribas Wealth Management in Asia in collaboration with Campden Research, relevant data points were gathered to understand the key drivers and motivating factors at play with the ultra-high net worth Next Generation (NextGen) in Asia. One of the most important insights that has been gleaned in this comprehensive study is that the NextGen Ultra-Rich are an emerging generation of Entrepreneurs with great clarity of purpose and direction.

In recent years, families have had to start considering whether the next generation will get involved in family businesses – and, if so, how and to what extent – and how prepared the NextGen is to lead family wealth management.

In this context, there are two broad areas that call for examination: the degree of harmony that will likely be seen between the generations as they work more closely together, and how family engagement with financial service providers will likely evolve,” the report says.

In recent years, families have had to start considering whether the next generation will get involved in family businesses – and, if so, how and to what extent – and how prepared the NextGen is to lead family wealth management.

Indeed, the theme about harmony is an important one to tackle and issues around succession planning takes a primal importance. But of particular interest also is how the NextGen will engage with banks and financial institutions as their needs, educational and professional experience are quite different from their parents’. It is foreseeable that relationship-based banking that their parents have been used to will be replaced by transaction-oriented banking. Moreover, demand for greater digital services and access to more granular reporting would be required.

Next Generation Wealth Management

In uncovering insights from ultra-high net worth NextGen, over 100 individuals were surveyed and 10 were interviewed. This remarkably diverse group of NextGen, whose average age is 38 years, has an average family net wealth standing at US$640 million.

They are highly educated and come with a considerable amount of prior work experience; majority of them are already successful business owners in their own right with diversified interests in Finance & Technology. They are native to Asia but can best be considered as global citizens of the world.

A particularly striking theme that continues to emerge in the research is that while many of the NextGen have significant experience, they still value learning from their parents and on the job. “There is a palpable admiration amongst the NextGen for their parents’ operational know-how and business achievements, and a clear desire for and awareness of the complementarity of the knowledge / skills between the generations,” the report reveals. Some of the most notable findings of the report are the following:

NextGen believe technical and operational skills hold strategic importance

NextGen have a strong entrepreneurial drive and decisions are made with direct application in mind.  Among the NextGen surveyed, 48% are educated beyond Bachelor’s level and a third, in finance-related subjects. Some 48% have also obtained work experience in finance. Against this backdrop, many of them see a job in finance as a stepping-stone to launch to a stronger entrepreneurial venture. What appears to be a natural progression for them is to join the family business to work under the tutelage of the previous generation wealth creators. Given the technical skills that the NextGen possess, matched with the operational skillset that they will obtain running the family business, a potent advantage can clearly be established.

NextGen are usually involved in both the family business and wealth management

NextGen value the hardwork and expertise of their parents in running the business, hence, they are very open to learning from them. Among the respondents who were surveyed, 45% are involved in both their family business and investing their family wealth while 14% are involved only with the business. On the other hand, those that are involved only with investing stands at 31%.

A noticeable difference between sons and daughters of wealth holders is that sons are more likely to be involved with both the family business and investing the family wealth (50% versus 33%). A similar pattern has been observed for firstborn NextGen as against subsequently born (51% versus 33%) and the under 40 compared to the 40+ (52% versus 38%).

NextGen prefer evolution, not revolution

It is also particularly telling that for NextGen, the knowledge of financial markets between generations are seen as different and complementary. They don’t necessarily believe that one generation knows ‘more’ or ‘less’ compared to the other. As such, there is more harmony instead of tension between generations as the NextGen display an evident admiration for their parents’ business accomplishments. Moving forward, given NextGen’s educational and professional experience, and the relatively early stage at which families in Asia-Pacific stand in terms of wealth management, there is a palpable drive to push for greater professionalism. It is also predicted that investment focus will shift from public markets to private markets.

Of particular interest also is that the NextGen are likely to come with more technical expertise in finance and technology, a more global outlook and wider networks in the start-up community. Giving a more well-rounded view, the NextGen participants in the study also shared their views on the relative shortcomings of the older generation in financial matters, which is mainly around implementing a governance framework. This is followed by an observation that the older generation did not adequately diversify. For a third of the participants, they noted that their family would have benefited from professionalising financial management and further diversification.

NextGen see the value of digitalisation but human interaction in banking is still needed

It is clear that human interaction still holds great importance among the NextGen. Only a small fraction prefers digital over direct human interaction with bankers to the extent that they are satisfied with never physically going to a bank or meeting with a banker (5%). A vast majority of them said that while digital is preferred, some direct interaction is still wanted (72%). A smaller percentage (23%) indicated a preference for traditional, direct approaches to banking. Diving deeper into the data, it was also revealed that 9% of participants under the age of 40 were content with eliminating direct human interaction with bankers totally but none of the 40+ participants agreed with this. One NextGen interviewee shared this view: “Some things cannot be fulfilled digitally, including discussions about strategy and solutions. We will still require human interaction. Digital is more relevant to execution, trading.”

A particularly striking theme that continues to emerge in the research is that, while many of the NextGen have significant experience, they still value learning from their parents and on the job.

NextGen are interested in a range of banking services

It is easy to assume that because the NextGen’s educational background and technical expertise is more advanced, that there will be a very low interest in a range of banking services. The study revealed that this is not exactly the case as many of them indicated an interest in a range of banking services although, their opinions on which services they are willing to pay are quite varied.

About 81% of the NextGen said that they are interested in banks anticipating the need for and providing relevant forecasts. For example, some advice on foreign exchange markets that will affect the family’s business and investments. Roughly the same proportion (80%) said that they are interested in being viewed as an institutional client and being offered the associated services, including alerts and quarterly reporting. However, on both services, only 42% of those interested are willing to pay.

The biggest gap between interest and willingness to pay corresponds to the provision of more frequent granular reporting – in which 78% expressed interest, but only 25% of which expressed willingness to pay. On the other hand, 68% expressed interest in banks integrating technology into investment management – e.g., algorithmic trading – and 45% of them expressed willingness to pay.

“Some things cannot be fulfilled digitally, including discussions about strategy and solutions. We will still require human interaction. Digital is more relevant to execution, trading.”

NextGen see a shift in focus from public to private markets with banks playing a role

Looking into the horizon, it is apparent that the next generation of wealth holders is moving away from public markets. In terms of investment focus, the study highlights a growing interest amongst the NextGen in private equity and venture capital, and in direct investments, in particular.

The participants were asked about the role of banks in generating private market deal flow and, for the great majority, banks play some role (82%). This includes 52 people who said that banks play a limited role – i.e., that banks are and will remain one of many providers, but that the family still prefers third-party / sector specialist sources;  24 people who said that banks play an important role – i.e., because families find it hard to identify and structure deals themselves. Finally, it includes 6 people who said that banks play an imperative role – i.e., reflecting the bank’s fiduciary duty and the alignment of interests.

The Next Chapter

The next chapter of wealth management in Asia will be an evolution of how wealth is created in the previous generation. The next generation ultra-high net worth individuals must be meaningfully involved in ventures they are taking part in. Armed with technical knowledge of finance, expertise in family business activities, and global networks on the one hand, and an entrepreneurial drive and eagerness to pick up operational know-how, on the other, the NextGen can prove to be an invaluable asset for family businesses and family offices.

As such, it also goes without saying that banks must step up and ensure greater internal stability. The NextGen places greater emphasis on long-term relationship with the banks however, such relationships must go beyond a traditional banking social event calendar and move into a more professional aspect of banking relations. These include overall bank stability, including financial, structural, and operational stability. The NextGen want less movement of personnel within and between banks, including relationship managers and senior management, and consolidation of roles, so that clients interact with fewer bankers.

In addition, what’s clear from the study is that banks need to provide a holistic service offering technical expertise, consultation and tailored services. The NextGen want their point of contact to draw on and coordinate between different bank departments and regional offices. Ultimately, banks must greatly improve their capabilities. As one of the NextGen interviewee aptly puts it, “Banks have to take more time to understand their clients in terms of what their motivations and long-term visions are. The ones who do this will actually be supporting the business and will see more success.”

To download a full copy of Banking, Entrepreneurialism, and the Next Generation of Wealth Holders 2020 by BNP Paribas Wealth Management, pls visit https://bnpp.lk/nextgen

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

 

BNP Paribas Serving entrepreneurs both personally and professionally

BNP Paribas: Serving entrepreneurs both personally and professionally

Entrepreneurs have unique and distinct requirements in an ever-changing world; only a global private bank can assist in their path of value creation with the ability to build a bridge between their personal and business needs. Serving these exceptional individuals is at the core of the offering at BNP Paribas Wealth Management and well ingrained in its DNA.

Bagging 12 major awards at the Global Private Banking Innovation Awards 2020 by The Digital Banker, there is no doubt that BNP Paribas is the leading name when it comes to wealth management. The awards include:

  • Winner, Best Private Bank Hong Kong
  • Winner, Best Private Bank United Arab Emirates
  • Winner, Best Private Bank North Asia
  • Winner, Best Private Bank Western Europe
  • Winner, Best Private Bank – Digital Innovation
  • Winner, Outstanding Private Bank for Growth Strategy
  • Winner, Best Private Bank for Equities
  • Winner, Best Private Bank for UHNW Clients
  • Winner, Outstanding NRI Offering
  • Winner, Best Discretionary & Advisory Service Offering
  • Highly Acclaimed, Best Private Bank, AI & Big Data
  • Highly Acclaimed, Best Next-Gen Offering

Touted as the world’s most authoritative and highly esteemed private wealth awards, the Global Private Banking Innovation Awards 2020 (GPB 2020) organised by The Digital Banker exists to  identify best in class Private Banks, Family Offices and Wealth Managers that demonstrate elite levels of performance & creativity across Fixed Income, ESG, Structured Investments, FX & Cash Management, and more.

Among the highly respected line up of judges who helped select this year’s award winners are elite industry professionals from companies such as Forrester, Protiviti and EY. Previous year’s judges include PwC, KPMG, and Fuji Xerox.

Serving entrepreneurs

In the past six years, BNP Paribas Wealth Management has engaged with over 15,000 high net worth (HNW) and ultra-high net worth (UHNW) entrepreneurs across the world in an effort to better understand their motivations and ambitions, their behavior and profiles as both investors and drivers of business and economic growth. And each year BNP Paribas discovers insights to reinforce its commitment and support to clients who are successful entrepreneurs; to address their personal and professional ambitions.

“Our research shows that in regular markets, private equity outperforms the stock market by approximately 6% per annum. In downturns, like The Great Recession or the Dot-Com bubble crash, private equity strategies outperform public markets even more, which gives clients some comfort,” says Prashant Bhayani, Chief Investment Officer (Asia) at BNP Paribas Wealth Management.

The sixth iteration of its Global Entrepreneur Report, in association with Aon, consists of several parts. The first part of the report focused on a global overview of entrepreneurial investment, wherein it appeared that entrepreneurs allocate 20% of their investable wealth to real estate and private equity. Real estate in particular was viewed as a safe asset class especially in the Asian context.

Our research shows that in regular markets, private equity outperforms the stock market by approximately 6% per annum. In downturns, like The Great Recession or the Dot-Com bubble crash, private equity strategies outperform public markets even more, which gives clients some comfort.

The recent part two of the 2020 Global Entrepreneur Report focuses on private equity and private real estate. The outlook of entrepreneurs globally on these segments is fascinating and demonstrates both the highly attractive nature of private equity and the deep sophistication of HNW entrepreneurs. Furthermore, it highlights the unique nature of the Elite entrepreneur population, focused on business excellence and looking for performance across investment and market cycles.

While the report also highlights different patterns – in particular with regards to liquidity risks or macroeconomic uncertainty – in outlook depending on geography, age and gender, these key findings underline the strong cultural affinity between entrepreneurs and investors for private assets. The unique place of real estate as a core investment within most investment portfolio is also confirmed, with entrepreneurs expected to continue to increase their portfolio allocation to the asset class (from 10% to 18%) in the next 12 months.

Responsible Private Bank

BNP Paribas Wealth Management believes diversification is a key feature of investment strategies. Over the past years, the Bank has seen a significant pick up in clients’ appetite for private equity. In this persistently low interest rate environment, investors are looking for diversification and higher returns to optimise their portfolio’s risk return profile. BNP Paribas has been facilitating private equity investments since 1998 and has established a proven track record in this highly specialised asset class.

In a context marked by the Covid-19 crisis, BNP Paribas is helping even more of the world’s most demanding entrepreneurs. As a responsible private bank serving the economy, its objective has always been, and continues to be, to improve its own understanding of how to support entrepreneurs both personally and professionally.

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>> To read more about this story and other exclusive features about the global private banking landscape, download the latest issue of Global Private Banker Magazine HERE.

 

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