A wider move towards regionalisation – the result of robust capital markets, cross-border deregulation and the increasing use of Asian currencies in cross-border transactions – is seeing banks in Asia shift their focus towards hiring a new breed of bankers able to serve cross-border investors.
“Most banks and financial institutions are now recruiting more aggressively for bankers targeting cross-border customers,” says Venus Chiu, head of wealth management at Wing Lung Bank. “Take our bank as an example. We plan to expand our scale of cross-border bankers by three times within one to two years.”
While a majority of customers are from the mainland, many also come from markets such as Taiwan, the Philippines, Japan and Singapore. According to Josephine Lee, head of wealth management at Citibank Global Consumer Banking, the majority are high-net-worth clients who are seeking to place their money offshore for various reasons, including portfolio diversification or investing in products that are not available in their home country.
But while wealth management is a major growth area, demand is also there for other financial services, such as insurance and asset management, Chiu says.
The number of millionaires in Asia is rising, especially in China, and figures from the Hong Kong Monetary Authority show that by 2020, the number of millionaires on the mainland alone will exceed 3.7 million, with a total accumulated wealth that will reach US$14 trillion. “This creates a huge opportunity for banks,” Chiu adds.
This is particularly the case in major financial centres such as Hong Kong and Singapore, which are closing the gap on previous heavyweight markets such as New York and London. Hong Kong is now the leading market for IPOs, and the top hub for the rapidly growing offshore renminbi (RMB) market – while Singapore is fast becoming a base for many global banks.
Given these regionalisation trends, “Asian banks will need to re-think their approach to recruiting, retaining and developing talent in line with their regional ambitions”, according to a recent report by management consulting firm Oliver Wyman.
As such, banks are increasingly looking for recruits who can do offshore business, speak their customers’ language, and have an in-depth knowledge of the micro and macro environments of their clients’ home countries and investment environments, and this includes the culture from which they come from.
“This understanding will be the winning factor,” Lee says.
Citing mainland clients as an example, Chiu notes that cross-border customers are keen to protect their wealth onshore and offshore, especially after the 2008 financial crisis. So these customers tend to be looking for simple and visible investment products that have stable returns.
“They [mainland investors] are more risk-averse compared with Hong Kong customers. Mainland customers are used to wealth management and trust products which offer fixed interests,” Chiu says.
“Bankers need to educate mainland customers on the different investment environments in Hong Kong and worldwide which eventually will help cross-border customers capture global investment opportunities according to their needs,” Chiu adds.
Product knowledge and a keen understanding of the respective regulatory requirements in both onshore and offshore markets are therefore essential.
“Bankers need to upkeep a robust market insight and product development trend as the market can be extremely volatile in some situations,” says Chiu. “Customers would expect the bankers to provide timely information and recommendations.”
Finally, both Lee and Chiu emphasise the importance of having soft skills.
“Mainland customers are usually relatively relationship-driven, treating bankers as friends, so it is important to establish a friendly and trustworthy relationship on the first contact,” Chiu says. “They will share with you a lot of personal stories which will allow you to understand their financial needs.”
As banks today gear up their human resources to capture this fast-growing customer base, the Wyman report says that successful regionalisation will depend a great deal on the strategies that banks pursue to compete with other regional and global banks to retain and attract talent.
“This is particularly a challenge for those pursuing international strategies based on global capabilities or clients with international needs and the international cultures to match them,” according to the Wyman report.