The leading lending organizations of China are opening global private banking offices. The wealthiest Chinese are looking for reliable, trusted organizations that offer secure, safe and strong financial services. However, these organizations are relatively new to this type of wealth management, and face several challenges.
While opening branches of private banking offices across Asia, North America and Europe, these organizations are competing with much more established private banking offices. Some offices are amalgamating and merging to become much bigger offices that can offer their clients a wider range of products and services. Chinese organizations are relatively new to this but are quickly developing to rival their competitors. Previously, these organizations were much more focused on investment and financial services within China, and competing with their domestic competitors. As clients look more and more to the worldwide stage, and global banking, these same organizations must provide the same standard of service, but on an international platform.
As well as being able to offer high end products, the global banking offices must deal with ever changing and improving regulations. The organizations must comply with the current regulations, deal with the world wide economic situation, offer high returns to their clients, and still maintain a profit margin as a business. The regulations are altered and becoming more and more rigorous, but they are there to protect the clients. However, maintaining a business that complies with all the various regulations, both domestically and internationally, is a highly complex and challenging process.
Also, the technology used by clients needs to be secure, safe and reliable. In these terms, while having an IT platform that offers robo-advice does give an edge, clients will always need face to face advice. Many clients prefer to meet the people who are handling their money, and while IT is a very important part of private banking, personal meetings will remain the most effective method of communication and decision making. Many wealth managers believe that there has been an increase in the number of their female clients, and that in the future this will rise further. There’s always the possibility that they will have differing approaches to how important the technology services are, when choosing their private bank, in addition to the financial services on offer. Therefore developing the proper IT and technology platforms could become more and more important.
Another challenge is that clients are used to seeing the returns when they’ve invested in markets such as Beijing. When they invest capital on a global scale, they’re investing in markets such as London and Hong Kong, which may be a safer investment but doesn’t produce the same rates of return.
The other thought that needs to be considered is the change from the first generation clients to the second generation. As the second generation prepares to take over the family wealth, a host of wealth management solutions need to be tailored specifically for each client. Both parties need to be involved in discussions on their needs and wants, with a personalized solution coming from that. Generally speaking, first generation clients prefer personal meetings, while second generation clients may prefer technology-based communications. This changeover also means that clients are considering issues like trusts, inheritance and how best to pass over the wealth. The second generation may want to move the capital into other investments that are of greater interest to them. These are all complex issues that are best understood with personal face to face meetings
Also, the markets themselves need to be considered. The wealth managers for the Chinese private banking offices are looking at the global markets, and not just those in mainland China. London, Singapore and New York have been major private banking hubs, but Shanghai looks as if it may join them in the future. It is emerging as a soft power, with a reputation for innovation and culture. Wealth managers believe that not only are the services and financial knowledge important, but having a local knowledge of these global banking hubs is just as important.
Although with all these challenges and opportunities, the wealth managers are competing with their national and international rivals to very high standards. While challenges such as the constant updating of stringent regulations, the use of IT and technology platforms, and the changeover of wealth from the first to second generations are present, the leading lenders of China are maintaining quality services and tailored advice for their clients on a personal basis. The wealthy clients that these private banking offices will pay for complex advice on financial issues such as trusts, inheritance, and family offices, although are not willing to pay as much for basic services. The wealth managers must remain focused on their clients needs, the global markets and making the clients money work for the client.