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January 4, 2018

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Super rich? Banks are lining up to provide you bespoke services

ABOUT 10 years ago, when well-to-do Shanghai resident Gao Junqing first heard the term “private banking services,” he wasn’t sure what it meant.

“Even the client-relationship manager at my commercial bank had little idea about it when I asked her,” Gao recalled.

Private banking is an umbrella term for an array of customized services offered to wealthy people. There is no precise figure for just how rich you have to be to join this exclusive coterie, but puts the minimum at US$1 million in liquid financial assets.

The asset threshold for becoming a private client of a commercial bank here has been set at 6 million yuan (US$922,069) by the China Banking Regulatory Commission.

Unlike ordinary customers, affluent clients are assigned their own account managers to give them personalized attention. The services they provide include investment management, financial advice on protecting and increasing wealth, and information on how to structure legacies for heirs.

Gao, 40, was among the first group of clients to tap private banking back in its early days. He made his money working in information technology for a multinational company and invested it wisely.

He told Shanghai Daily that he remembers his first client-relationship manager.

“She had some traditional Chinese medicine with her and explained that it was for the next client she was scheduled to see,” he said. “I was awed by such considerate service.”

The idea of private banking for the moneyed class is not really new. More than 200 years ago, Lombard Odier, the world’s first private bank, was founded in Switzerland. Over time, as more people in the world became rich, the concept of elite banking took hold.

With private wealth on the rise in China, banking catering to the well-heeled was inevitable.

That segment of financial services has “huge potential” for growth, according to the 2017 annual report released by China Merchants Bank and Bain & Co. Total investible assets of the super rich nationwide will rise by 14 percent in 2017 to 188 trillion yuan.

In the past decade, that segment surged fivefold to 165 trillion yuan in 2016, with 1.6 million people classified as super rich, the report said.

This means that about 400 “new faces” joined the high-net-worth club every day during the period, the report said.

Bet on technology

“We Chinese people are born to financial investment because we have a tradition of saving for a rainy day,” Gao said. “I started thinking about how to manage my money as early as 2002, but at that time, there were limited options and only conventional banking products available. Private banking services opened more diversified investment channels with greater convenience.”

Private banking clients enjoy discounts on financial services. For example, customers in export businesses have access to more favorable foreign-exchange rates.

Bankers, of course, are eager to court the super rich.

Bank of China, the first Chinese bank to offer private banking services in 2007, now boasts an aggregate 100,000 super-wealthy clients, with assets under management totaling 1.2 trillion yuan, Liu Qiang, vice president of the bank, told a recent gathering.

Last month, Bank of China opened a new academy dedicated to training more professionals in this expanding sector.

To ride the wealth management wave, Liu said, the bank will embrace artificial intelligence technology to enhance services to private banking clients.

Shu Wei, who made her money in the tea business and now is a private client of the bank, told Shanghai Daily that she values such quality, personalized services.

“Whenever I have some financial need, my client manager will come to my home and offer me the best advice and solutions,” she said. “Ten years ago, everybody, including me, dreamed of becoming rich overnight. We used to seek higher investment yields from the private banks, but now that’s not only thing.”

Bank of China’s global facilities help in both her business and in her personal travel, Shu said.

Tech-savvy clients like Gao want faster response times and a better quality of digital services. For him, the private banking arm of PingAn Bank has outperformed many of its peers in that regard.

Gao said there are too few qualified professionals in the private banking sector and more personalized products are badly needed. He said he hopes that big data and artificial intelligence technologies like machine learning will enable banks to provide more personalized solutions for clients.

“Machines know us better,” he said. “They can record our investment behavior and give us some early warning about possible problems. Technology can also remove some unqualified investment consultants.”

Indeed, the China Merchants Bank-Bain report predicts that digital experiences will have a “critical” impact on customer loyalty and a “revolutionary” impact on the services and operational models of wealth managers.


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