UOB to double wealth income by 2026, launches digital investment offering

UOB said on Thursday that it aims to double its wealth income and increase its assets under management (AUM) compound annual growth rate by double digits in five years, as part of its plan to capitalise on the burgeoning base of the emerging affluent in the region.

This comes amid a push by the bank to democratise access to wealth management solutions with the launch of its new digital investment offering known as SimpleInvest, which allows customers to invest for as low as S$100 from three portfolios based on their objectives and risk appetite.

With digital adoption accelerated over the past year due to Covid-19, the bank is expecting one in four customers to carry out digital self-serve wealth transactions in two years. This is up from the 10 per cent who do so currently, said Jacquelyn Tan, head of Group Personal Financial Services, UOB.

In a media briefing on Thursday, she announced that the bank will pump in more than S$200 million in digital innovation over the next three years to serve consumers.

SimpleInvest is among UOB's suite of digital wealth solutions that will enable customers to choose from three portfolios on its banking app UOB Mighty called "Liquidity", "Income" and "Growth", in ascending order of risk.

Unlike a robo-advisory, the portfolios will be actively managed. UOB had partnered UOB Asset Management to develop the "Income" and "Growth" portfolios which invest in funds selected by the bank, with funds actively managed by asset managers such as Allianz, Fidelity international, JPMorgan Asset Management, Schroders and UBS Asset Management. Meanwhile, the "Liquidity" portfolio will be managed by UOB Asset Management directly.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The "Liquidity" portfolio will invest in high-quality bonds, money market instruments and bank deposits, while the "Income" portfolio will invest in fixed income, equity and multi-asset funds. The "Growth" portfolio will invest in equity funds diversified across sectors and regions which are beneficiaries of structural growth themes such as healthcare, artificial intelligence, and sustainability.

There will be a 0.8 per cent sales charge deducted from the investment amount.

Ms Tan said that during the pilot, two in three customers were either millennials or those who parked money in a savings account and wanted to make their money work harder. One in three has also gone on to set up regular investment plans.

"While the barriers to accessing digital financial solutions have lowered, our research has shown that consumers can feel overwhelmed by a plethora of products," she noted. "Our approach is to guide customers to the solutions that make the most sense for their financial goals and we use a combination of human expertise and technology to do so."

UOB's SimpleInvest will be progressively rolled out across the other markets in the region over the next few years.

When asked if UOB is slow to the game as rival banks and fintechs have already rolled out various investment products ranging from curated portfolios to robo-advisors over the past few years, Ms Tan only said that the bank focused on being "very thoughtful" in the way the product was structured.

"We really took the time to understand what is it, from a customer's perspective, is important to them, and how we can address it through simple solutions and transparency in fees," she said. "It needs to fit in the strategic intent and a bigger story, otherwise we are just growing in parts."

This drive to expand digital wealth management solutions for customers is in line with UOB's omni-channel approach, said Ms Tan. She cited the bank's research which found that two in three customers still prefer face-to-face wealth advisory for more complex financial transaction.

While the bank continues to ramp up digital investments, it is also constantly reviewing its physical network to better serve customers, added Ms Tan.

The bank has repurposed several of its branches over the years to include more space for wealth management advisory and offloading low-value transactions, with this trend likely to continue.

She believes that the bank's omni-channel approach to wealth management also puts it in good stead to fend off digital bank rivals that will start operations next year. "Yes, we think we are well-positioned even with the digital banks coming in, because our transformation journey started many years ago," she said, adding that there will be more such innovations in the pipeline for UOB.