Changing paradigms of Affluent and Private Banking

A consumer awareness initiative by Standard Chartered Bank in association with CNBC-TV18 under the India on the Move series (Season 5), telecast on 10th August 2021.

The seismic shifts caused by the pandemic has changed financial markets globally.  These changes have impacted the dynamics of managing wealth and evolution of the HNI/UHNI profile of clients.  To understand these affluent banking trends and charter course for future actions, Mridu Bhandari from CNBC-TV18 engages with an expert panel comprising Nakul Jain, Managing Director, Private, Priority Banking and Deposits, Standard Chartered Bank, India, Naveen Agarwal, MD & CEO, Motilal Oswal AMC and Sreedhar Vegesna, Partner and Financial Services Leader, PwC India.

All panelists agreed that technology has tipped the scales in favour of investments as investor appetite for risk is on the rise, returns are getting better, and clients are more responsive to banking and advisory channels of communication.  Nakul observed that the pandemic has caused far reaching impact on wealth beliefs as clients are looking at investments with a whole new purpose.  To respond to the changing client needs, Standard Chartered maximised the opportunity to digitise their services on wealth creation platforms.  He added that clients are keen to interact with the bank on wellness agendas, market insights and dealing with physical and mental well-being.  This prompted Standard Chartered Bank to host seminars for most clients whose wards are overseas.  He quoted “Clients have started seeing banks as partners and not just investment advisors”

Talking about consumer behaviour in the face of market volatility, Naveen Agarwal drew attention to two key trends, one that saw an increase in international funds and secondly, rise in passive funds as an alternative to large cap funds citing the reason of low returns.

Adding further to the discussion Sreedhar pointed out that clients today seek uncluttered wealth solutions coupled with the ability to diversify early on, he emphasised that the need of the hour is simplicity combined with sophistication.  He further added that clients today want to study investment behaviour of peer groups, be a part of a community of investors, and are actively seeking trust, which is imperative for a bank to provide.

On the technology wave propelling scalable processes, Sreedhar discussed how technology and data are strong enablers in this regard.  He spoke about the emerging class of tech savvy investors that leverage data to assess timely risks in their portfolio and veer their investments onto better avenues.

Adding to the discussion on scalability of digital technologies from an AMC perspective, Naveen explained that financialisation of Indian savings has been a big trend for nearly half a decade, further, the lowering of data costs, increased internet penetration and easy accessibility have added to the boon.  He exclaimed that advisory services is no longer the prerogative of the wealthy.  He is excited about the changing landscape as he mentioned that millennials today are warming up to investing at an early age, he said “This is fantastic news as the magic of compounding works miracles if you start early”.

Speaking on the concerns HNIs have at this point in time, Nakul admitted that clients are anxious primarily over falling bond and cash yields, he mentioned that investment will need to go up the risk curve either by increasing allocation on equities or lowering the quality of bond or duration.  He holds the belief that equity allocation must be increased to make handsome returns.  Other concerns include how long will the value last, what is a good time for entry and exit.  On the behavioural front, clients are apprehensive over next generation readiness, transfer of wealth from one generation to the next and succession planning.  Standard Chartered is trying to address this challenge with their Future Global Leaders program.

Concluding the discussion with an eye on the future, Sreedhar spoke about the imminent trust factor as the client relationship is no longer transactional, the need for community-based type of investment pool and propelling technology investments.  He also mentioned growing investor curiosity in the area of crypto, acquainting clients with different risk tools and platform capabilities as the younger breed of investors are coming into the fold at a much early stage.

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