: Value Investing Forum - Singapore, Hong Kong, U.S.

Full Version: Banks set sights on young 'emerging affluent' group
You're currently viewing a stripped down version of our content. View the full version with proper formatting.
Look! This term comes up again - net worth of $10,000 to $100,000 are classified as "emerging affluent". So how is this defined by the bank? Investible assets? Seems like a really low threshold. Most students would have $10,000 to invest as per today's interview in BT? Tongue

Also curious as to why some banks require you to have a $600,000 mortgage with them before they consider you..... Huh

Banks set sights on young 'emerging affluent' group

by Jo-Ann Huang Limin
04:46 AM Apr 18, 2011

SINGAPORE - Banks in Singapore are chasing young, successful professionals as potential clients for a new segment of consumer banking - the "emerging affluent".

There are an estimated 500 million emerging affluent individuals in the region. Banks have differing standards and definitions for this group: For instance, Citibank considers individuals with a net worth of US$10,000 (S$12,000) to US$100,000 to be emerging affluent. For Standard Chartered, emerging affluent individuals are required to have investible assets with the bank of S$72,000 and above, as well as a mortgage loan of S$600,000.

As different as the definitions are the ways in which the banks are wooing this group. Citibank - which is targeting countries such as China, India and Malaysia for its new emerging affluent services - has launched new services such as 24-hour online secure e-chat with customer service representatives, free global fund transfers to other Citibank accounts and dedicated personal bankers.

Catering to the needs of this segment is a way to retain customers in the long-run, Citibank said. In the last three years, more than 50 per cent of customers from its Citigold banking segment - which comprises individuals with between S$200,000 and S$1 million in investible assets - were upgraded from the emerging affluent or the personal banking segments.

Citibank Singapore country marketing director Jacquelyn Tan said: "We've seen a lot of emerging trends where ... our customers within this segment are increasingly more mobile." She added that these customers are demanding, among other things, "convenience and personalised services for their banking needs".

UOB expects its proportion of profits from the emerging affluent and high-net-worth individual segments to reach 50 per cent - up from 35 per cent - in four years.

In August last year, Standard Chartered launched its preferred banking service for the region's emerging affluent individuals. The bank is hiring 150 relationship managers in the next two years to cater to this growing customer base.

In terms of products and services, analysts said American and European banks dominate the Asian emerging affluent market. Said Mr Alfred Chan, director of financial institutions at Fitch Ratings: "Asian banks really need to pick up. They haven't really gone down to what the Western banks did but I don't think it is much of a challenge."

Emerging affluent individuals make up one-third of Asia's consumer banking revenue and banks forecast this figure to rise. They project an 8- to 15-per-cent growth in revenue from this segment annually for the next few years. Jo-Ann Huang

the way banks determine 'net worth' is very simple; your total amount of liquid assets (cash + investments) with the bank. any outstanding debt or loan facility is irrelevant, so long as the client is able to service the interest/installments.