Dealing with Asia's younger, more entrepreneurial millionaires

ASIA'S newly minted millionaires are younger and more entrepreneurial than those in the west, they are also more IT savvy and said to distrust conventional banks, how are private banks dealing with this?

The wealth generated in Asia is largely first generation, whether it is the substantial proportion held by the older tycoons, who are now facing the challenges of their succession issues, or the next wave who are vying to be the new wave of tycoons.

While it would be unfair to say that the western equivalent is lagging, it would be fair to say that there are significantly less opportunities in the west given both Asia's position as a global manufacturing centre and commodity hub, compounded with its own internal growth dynamics.

The new generation of young, tech savvy entrepreneurs who are controlling larger amounts of wealth challenges the private banking industry to be innovative and to adapt to the evolving demands and requirements of this client segment.

Successful first generation entrepreneurs are typically hands on and aggressive risk takers, and this nature flows into their private banking relationships where they have high demands for information, products and services, and they wish to remain the decision takers as they seek above average returns.

As business owners and creators of wealth these clients have many demands, but above all they require a robust and comprehensive platform with which they can engage and draw on to support them in their business and personal goals.

For a private bank to engage effectively, it needs to be part of a broader global enterprise, encompassing corporate banking and securities capabilities and transaction banking services as well as a private banking based product and solutions platform.

For those banks able to provide such a platform, the challenge they face today is to deliver these products, services and solutions in a co-ordinated, transparent and timely manner whilst evolving the manner in which they engage with their clients and creating an interface that optimises the digital and software revolution in which we find ourselves. The result is that private banks are focusing considerable energy and resources on three key areas.

Firstly, they are optimising their platform to ensure a seamless delivery of the bank's entire range of products and services across their entire operating platform, globally. Whether the client needs corporate finance advice, advice on how to manage their company's trade finance or international payments, or whether the client requires personal investment portfolio or wealth transfer advice, the private banks who are delivering in this space are providing a total "One Bank" access through their private banker.

Secondly, the digital and software revolution is pressuring the private banks to create a more effective digital interface between the client and the banks' platform. The correct nature of this interface is still evolving, but one thing remains certain.

This client segment ultimately requires a human interface to provide the sophisticated counselling and advice needed to navigate their complex business and personal objectives. The digital interface is therefore evolving as a complement to the personal interface, providing transparent, timely and comprehensive information to enable the client to make better informed decisions, and to execute those decisions.

Ultimately, the client in this segment will still need the guidance of their banker given the complexities of their needs and an understanding of their requirements in order to deliver the correct solution.

Finally, the private banks are and will continue to be under significant margin pressure. The effectiveness of their operating platform will be a key component to their competitive edge and ultimate success or failure.

The pressure here is leading to improved processes and efficiencies which will benefit both the banks and their clients. It draws considerably on the ability to utilise efficiencies in information technology to automate and provide straight through processing of multiple segments of a bank's operating processes, while taking the opportunity to outsource some services which can be more efficiently managed elsewhere.

The private banks which will be the winners in the next five to 10 years are those banks that seek to become more client centric, and adapt and innovate to the evolving demands. They will need to work as a co-ordinated platform, both regionally and globally, and finally they will need to speak the same language as their clients, delivering information and enhancing engagement through the effective use of digital and information technology.