Top 5 struggles faced by #privatebanks tapping into Asia

According to a survey done by McKinsey, private banks are expecting a windfall from Asia. However, despite the fact that private banks recognise the potential in Asia, especially emerging markets like China and India, private banks are struggling as they recognise that it is more difficult to enter than expected. To read full article, click here.

According to the article, these are the top 5 struggles faced by private banks.

1. The costs for relationship management in Asia is high, compared to regions like Europe or the US. Private Banks struggle to get the margins or survive as the products in Asia are simpler, resulting in lower margins.
2. Private Banks acknowledge the fact that, to go forward, they will have to grow the active wealth management arms of their businesses. As a result, with increasing competition from other private banks, and everyone coming in and trying to grow active, this averages to a lower wealth distribution among bankers and an added overhead faced by private banks.
3. Growing expectations are placed on private banks’ relationship managers as a majority of the wealthy customers have more than three wealth management relationships with banks. As a result, private bankers have to step up their game and go beyond the expected.
4. As private banks are paying substantial amounts for compliance costs, compensation for relationship managers and the rising costs of serving customers, it is a real struggle for private banks to get the margins.
5. Private banks struggle to “uncover” the wealth of their clients as a pool of their customers have a number of banks working with them at one time.

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