Outstanding Private Bank for Growth Strategy
China Merchants Bank (CMB) won Outstanding Private Bank for Growth Strategy at the virtual PBI Global Wealth Awards 2021 because of its 24.36% AuM growth rate last year, helped by strategic advances involving (i) diversified services, advice & products; (ii) online & remote servicing in response to Covid-19; (iii) digital operations and marketing; (iv) events.
CMB Private Bank (PB) was established in August 2007 for high-end clients with assets of over RMB 10 million (US$1.55 million) beyond the lower level wealth management parameters. The PB is growing fast, as indeed China has been during its lifespan, benefitting from its presence in the expanding country, but also its awareness and future strategy to follow clients’ international expansions and their footprints. As Chinese firms operations have gone increasingly global over the past 14 years, so have the bank’s. For example, as initial public offerings (IPOs) by Chinese companies on foreign stock markets grow a whole group of entrepreneurs is being turned into potential PB clients. Targeting and catering for them delivers growth.
The PB is also successfully converting corporate finance clients that wanted loan help from the commercial bank and successful entrepreneurs on its own books into private banking clients latterly as they age, advance and require advisory help turning business success into a legacy. This creates a clear value chain and pathway across its organizational operations.
The bank’s effective strategy is illustrated by the fact that:
High net-worth individual (HNWI) clients rose last year by 22.41% to 99,977, a three-year high that extends its lead over domestic rivals.
The average per capita Assets under Management (AuM) figure for clients was RMB 27.75 million ($4.3m) each.
AUM grew 24.36% in 2020, or RMB 543.6 billion ($84.95 billion) from the year before even amid the Covid-19 pandemic, which paradoxically perhaps lead to a surge in savings and/or wealth planning for the affluent. Despite the challenging environment people wanted to sort out their legacies, release or store capital depending on their needs, and generally rejig their finances.
The key strategic decisions to follow and cater for Chinese wealth as it internationalizes and create a pathway from the commercial into the private bank for entrepreneurs, have been backed up specific growth initiatives, such as:
Diversified services, advice & products: Over its lifetime, CMB PB has established a service system with professional investment consultant teams as its core advantage. It has improved product services and overall assets management capabilities, including market research, investment strategies, block asset allocation, product portfolio selection, and performance tracking and surveillance. Qualified private bankers together with the investment consultant team provide a set of exclusive high-end wealth management plans for clients, including giving advice on funds, shares, bonds, foreign exchange (FX), insurance, and other varieties of portfolio. Moreover, they can also provide professional suggestions in terms of law, tax, corporate finance, investment banking, and advisory services in the fields of private equity, real estate investment, art collection etc. The unit now spans the full gamut of private banking.
Online & remote servicing: As Covid-19 forced businesses and clients to change how they interact, CMB PB accelerated its digitalization. One example is its Private Banking Exclusive Zone (PBEZ), which is based on China Merchants Bank’s app that has 80 billion monthly active use instances (MAU). PB clients with their modified version can now easily reach necessary reporting, advice and other such online PB services on the special platform.
Digital operations and marketing: online campaigns, such as the ‘Exclusive Upgraded’ one attracted over 100,000 participants and 12,000 of them have been converted into qualified PB clients by increasing the financial assets in their CMB accounts. All they needed was some encouragement, and it didn’t have to be face-to-face, which was hard during Covid-19. The online and remote servicing capabilities described above were enough to ensure business operations could continue as ‘normal’ in a digitalized manner. Marketing and growth strategies were no different.
Events: Investment strategy seminars have been held by CMB and other investor education events for well over a decade. The aim is always to help clients grasp trends in the global market and understand how best to invest. Branding, new sign-ups, extra allocations and other such benefits all accrue, even if sometimes the events have had to held online recently due to Covid-19. Digitalization makes this possible.