Maybank Singapore's strategy to drive wealth management costs down

The bank is enhancing its digital capabilities beyond portfolio reviews to support a growing number of online transactions.

With over 48,000 individuals worth over US$30m calling Asia home, Maybank Singapore is intensifying efforts to capture the opportunities arising from the rapid pace of wealth creation in the region and hold firm against rising costs and more established Western rivals. In an exclusive interview with Asian Banking & Finance, Alvin Lee, head of group wealth management and head of community financial services - Singapore at Maybank outlines the bank's strategy to bring Asian wealth management strategy to the spotlight. 

What are trends in Singapore's wealth management landscape and how is Maybank Singapore responding to these industry trends?
We will see Singapore’s wealth management industry flourish and grow significantly as Asia’s level of affluence overtakes North America to be the wealthiest region in the world. Singapore has always been an attractive market for the well-heeled to use for their investments and risk diversification. Singapore’s favourable tax regime, open market, safe haven status continue to be important factors for why we are the preferred wealth management hub in this region.

For us at Maybank, wealth management is an important cog in our universal banking model. We want to offer our customers a comprehensive suite of solutions across both their business and personal needs. We are therefore making investments in platforms, people and processes to make this service delivery as effective and efficient as possible. We are extending our wealth management core banking platform from Singapore to the other markets and will enhance our digital capabilities as we go along. We have also rolled out a Wealth Management Academy to ensure our Relationship Managers are proficient and up to speed on the latest developments. As for processes and policies, we are constantly reviewing and refining them so that the entire customer experience is a delightful one.

We recognise this rapid pace of wealth creation and more importantly, that our clients will need advice and solutions to manage their wealth. Our wealth management business is therefore not just working to serve the billionaires but also the high net-worth individuals and other affluent customers. We have the endorsement of our group Board and the entire group – from technology, operations, compliance, risk management to human resources – is geared towards creating a strong wealth management proposition for our clients. Our clients, apart from those who are new to Maybank, are coming from not just our retail network, but also our non-retail segments like SME/Business Banking and Corporate Banking, our brokerage business in Maybank Kim Eng, our insurance arm Etiqa and fund management unit Maybank Asset Management. Collectively as a team, we are guided by the credo of offering “Wealth Management with Heart”.

In a 2018 report, Deloitte hails Singapore as the region's leading WM hub but notes slight weakness in provider capability. How can banks in Singapore respond to this pain point and does Maybank have any specific initiatives in place to improve provider capabilities?
European and US banks have a longer history of private banking, with several Swiss banks going back 200 years when they first started providing such a service. Wealth Management in Asia effectively took root in the 90’s and in less than 30 years has grown to be the second wealthiest region after North America. This rapid growth has put a strain on the talent pool, which in turn has an impact on service delivery to clients. 

Looking at it from a different angle, Asian investors are relatively more self-directed than their European counterparts. Many choose to trade in the cash market directly instead of relying on portfolio allocation and discretionary management. This has led to bankers to be more executional rather than advisory, which could be a reason why there is a perception of being weaker in capabilities.

Many things are happening at the collective industry level, as well as in individual banks, to address this issue. Regulator and governing bodies such as the Association of Banks in Singapore and the Institute of Banking and Finance are leading various initiatives to enhance the competency of financial advisers. These initiatives include organising courses which banks can send their advisers to or providing a curriculum which banks can incorporate into their own in-house trainings. At least two universities are now offering Wealth Management post-graduate courses. Stringent registration processes ensure that all bankers meet the required benchmarks before being able to start work, and disciplinary actions such as suspensions and outright bans are meted out to erring ones.

At Maybank, we define provider capabilities as giving the right solutions and the right service. Right solutions stem from having a comprehensive suite of products that meet clients’ investment objectives and risk tolerance. This needs to be put together with an appropriate platform that allows them to have a clear and timely view of their portfolio and performance. We have therefore been continually enhancing our product offerings to cover all market conditions and asset classes, as well as implementing a technology platform that puts everything together for our clients.

We believe delivering the right service boils down to hiring the right people. Hire talent who are competent, possess the right service attitude and ensure they are correctly remunerated to encourage the right behaviour. To help us achieve this talent management objective, we have launched a customised training curriculum at Maybank Wealth Management Academy. This programme is a combination of the best of what our strategic partner, NTU Wealth Management Institute, offers along with Maybank’s own training philosophy in sales culture. Central to this philosophy is about always doing the right things for our clients.

Cost margins in Singapore WM centres have also grown at 66 bps which makes it as the world's third highest in 2017, even as Western counterparts have been cutting down costs as part of their strategic priority. For Maybank Singapore, where has these pool of investment gone to? 
The higher cost margins here are due mainly to personnel and platform, and more recently also compliance costs. Because of the rapid growth of the industry, there is an intense competition for talent. It has been common for banks to reward higher renumeration packages in their quest for talent, especially for the relationship managers. The average vintage of RMs in Asia is shorter than that in Europe and the US. They are typically also younger which means that their natural propensity to explore with a new employer is higher. However, I expect this “musical chair” game to eventually slow down because the stricter Know-Your-Customer (KYC) requirement makes it ever more tedious for the RM to onboard clients with a new bank. There is also an element of client fatigue when the client is required to follow the RM to a new bank every few years. I expect the slower staff turn-over coupled with bigger AUMs across the board to help lower costs margins to a more sustainable level.  

At Maybank, we have effectively been investing in people, platforms and products. As we continue building up our capabilities, we have been increasing our bench strength across front, middle and back-offices here in Singapore, as well as Malaysia and Hong Kong. I believe that our people are the key differentiator and therefore we invest heavily in bringing aboard people who believe in our mission and credo. Another area is technology. Having a strong core platform to support products and portfolio is the pre-requisite and over time we will also enhance our digital capabilities beyond portfolio review to support more online transactions. As for products, while an open-architecture allows us to source for the best of breed solutions, we are diligently working with our in-house product partners in Maybank Global Markets, Maybank Asset Management, Maybank Kim Eng and Etiqa Insurance on differentiated products.

What I believe we are doing differently from most WM players is in the area of performance assessment and remuneration. Because of our belief that we need to sell based on client needs and not to meet a revenue target, and that performance must be appraised with market conditions in mind, we take a longer-term view of staff performance instead of a monthly or quarterly view. This gives our RMs the confidence to do what is right for our clients, as the bank will always recognise them for the long term relationship that they are building. With this practice, we find that our staff turn-over is lower than the industry average and staff engagement is much higher.

What's the outlook for wealth management in Singapore, and by extension in Asia?
I believe that the Singapore wealth management industry will grow rapidly along with the increased affluence in Asia because of our strong sovereign rating and open markets. 

Singapore’s traditional rival, Hong Kong, will also shine as the financial hub for China’s Greater Bay Area (GBA) economic zone. Hong Kong was the gateway to China for the past 20 years, but with the improved connectivity amongst the 11 cities including Shenzhen, Guangdong and Macau, Hong Kong’s financial activities will pivot from Greater China to GBA. The wealth created in the process will enrich Hong Kong’s wealth management landscape. Singapore, however, will continue to appeal to the Chinese people who want to spread their eggs in different baskets.

An interesting development to observe is Thailand’s status as the only country in this region that is not a part of the Common Reporting Standard (CRS). CRS levels the playing field in terms of tax reporting for wealth management players in participating countries and Thailand’s exclusion offers some advantages. The recent collaborations between Thai banks and Swiss partners can be attributed to this development. Then again, for Thailand to seriously challenge Singapore as the leading international wealth management hub requires them to do more in areas like access to talent and strong governance.