Premier Banking Services in Hong Kong

SUMMARY

Overview

Introduction

This report considers approaches to premier banking in Hong Kong. The report outlines the major trends, identifies opportunities for market entrants and existing players and profiles providers that are innovative or that have achieved success serving the premier customer segment.

Scope

• Looks at the growth of the Hong Kong market and the most popular products amongst affluent individuals, and identifies competitor opportunities
• Sizes the population that would qualify for premier banking services in Hong Kong
• Provides action points for domestic and foreign banks looking to attract and retain these premier banking clients

Report Highlights

The variable macroeconomic conditions over the last few years have not had the impact upon affluent wealth creation that one would have expected. In fact, growth in total retail liquid assets has been relatively strong over the 1999-2004 period at 6.1% compounded annually.

ABN AMRO offers a relatively elaborate referral rewards program for existing clients, whereby they can earn different amounts of cash for referring potential clients depending on the level of assets the potential client has and the number of successful referrals the client has already made.

Income is a substantial indicator of future or potential wealth as a proportion of this income is ultimately saved or invested thus building up the asset base. This suggests that some banks could steal a march on their competitors and get into the market early by focussing on income rather than assets.

Reasons to Purchase

• Find out how big the market is and what your potential share is or could be
• Find out how big the gaps are and what the opportunities for growth will be going forward
• Find out who is competing in the market and what they are doing well, plus what innovative players are doing overseas to attract these clients

TABLE OF CONTENTS

• CHAPTER 1 INTRODUCTION
  • What is this report about?
  • Who is the target reader?
  • How to use this report
• CHAPTER 2 MARKET OVERVIEW
  • Introduction
  • Hong Kong's economy was weak over the 1999-2004 period, yet retail wealth increased
    • The economic environment was not conducive to growth
    • The share of liquid wealth owned by the premier segment increased over the 1999-2004 period
    • And the number of individuals eligible for premier banking has increased
  • Data
• CHAPTER 3 PRODUCTS AND SERVICES
  • Premier offerings revolve around a few key products and services but lending is not a 'premier' criteria
    • Relationship is the primary selling point
    • Platinum credit cards are a key part of the premier offering
      • The popularity of platinum credit cards has increased
      • There are a number of reasons to issue a platinum card
      • Platinum credit cards are issued by ten of the largest competitors in the Hong Kong market
      • The future of 'color' marketing continues to hold its shine
      • Are customers lusting after more than platinum?
    • Premium deposit accounts allow clients to hedge currency risk
  • Data
• CHAPTER 4 COMPETITIVE DYNAMICS
  • Competitors in Hong Kong have rich pickings
    • Almost all Hong Kong retail banks value premier clients
      • The locally incorporated banks
      • Other locally incorporated banks
      • The foreign incorporated banks
    • Other markets place very different importance on premier banking
  • Assessment of online provision reveals a mixed bag
    • UOB has built a notion of exclusivity
• CHAPTER 5 FUTURE DECODED
  • The economic and financial outlook is positive
    • Forecast assumptions show strong GDP growth
  • Retail liquid assets are forecast to grow at a sustainable rate
  • The outlook for the premier banking sector is reasonably positive
    • The premier population is growing at a rate of 5.2%
    • Premier banking individuals are to maintain their share of assets
  • The Hong Kong players will seee some challenges ahead
    • There is very little differentiation at first glance
    • Competition is only going to get more intense
    • Clients will become more demanding
  • There are two criteria that the competitors are overlooking
    • None of the competitors take into account lending in their thresholds
    • Income is not currently a consideration
  • Data
• CHAPTER 6 APPENDIX
  • Definitions
    • AAGR
    • CAGR
    • Gini index
    • Liquid assets
    • Liquid asset bands
    • Premier banking population
  • Research methodology
  • The Global Wealth Model
    • The UK sub model
    • Asia-Pacific sub model
    • Forecasting methodology
    • Datamonitor's wealth numbers compared with others' numbers
  • Bespoke Wealth Market Sizing
  • Further reading
    • Datamonitor Asia-Pacific Wealth Reports
    • Datamonitor Asia-Pacific Insight Reports
    • Datamonitor Global Wealth Service: Competitor Tracking
  • Datamonitor Financial Services Consulting
  • Asia-Pacific contacts
  • List of Tables
    • Table 1: Underlying macroeconomic factors, 1999-2004
    • Table 2: Onshore liquid assets held by mass market, premier banking eligible individuals and private banking eligible individuals, 1999-2004
    • Table 3: Proportion of adult population that are eligible for premier banking and private banking services according to threshold USD60,000 in investible assets, 1999-2004
    • Table 4: Liquid assets owned by individuals that would qualify for premier banking services split by liquid asset band
    • Table 5: Number of individuals that would qualify for premier banking services through liquid assets of between USD60,000 and USD1m split by liquid asset band
    • Table 6: Number of high-income taxpayers in Hong Kong by annual income, 2002-2003
    • Table 7: Average credit card spend by type of card, 2004
    • Table 8: Forecast macroeconomic factors, 2004-2008
    • Table 9: Forecast liquid assets of premier banking eligible individuals split by liquid asset band, 2004-2009
    • Table 10: Forecast number of premier banking eligible individuals split by liquid asset band, 2004-2009
    • Table 11: Forecast onshore liquid assets held by mass market, premier banking eligible individuals and private banking eligible individuals, 2004-2009
    • Table 12: Wealth markets that have been modeled using the Global Wealth Model
  • List of Figures
    • Figure 1: Methodology diagram and report structure
    • Figure 2: Property prices in Hong Kong have decreased considerably since 1997
    • Figure 3: Despite weak underlying macroeconomic conditions and a volatile stock market, retail assets grew strongly over the 1999-2004 period
    • Figure 4: The share of liquid assets owned by clients eligible for premier banking services increased over the 1999-2004 period along with the share of wealth owned by those with more than USD1m
    • Figure 5: Those eligible for premier banking in Hong Kong owned USD269bn in liquid assets at the end of 2004
    • Figure 6: The number of individuals eligible for premier banking increased by 37% over the 1999-2004 period
    • Figure 7: The average spend on premium credit cards is much higher than on standard cards, 2004
    • Figure 8: An assessment of selected online provisions for premier banking clients in Australia, Singapore and Hong Kong
    • Figure 9: UOB's Privilege Banking service is easily accessed from the bank's Personal Banking page
    • Figure 10: UOB Privilege Banking's website uses black and gold to give it an exclusive feel and to differentiate it from the bank's mass market services
    • Figure 11: The number of individuals eligible for premier banking is set to grow at an average rate of 5.2% over the 2004-2009 period
    • Figure 12: The premier banking population will maintain its share of wealth over the 2004-2009 period
    • Figure 13: There are a large number of high-income individuals in Hong Kong that appear to be overlooked by the premier brands, 2002-2003