Local Asian banks, particularly those already serving the business needs of clients as well as their wealth requirements, are well positioned to continue flourishing, sometimes pushing back at the international banks that have been prominent features in the region's wealth landscape.

There is a power shift in Asian banking and around $1.3 trillion of wealth is being transferred, some estimates say. Commercial banks in centres such as Singapore have a “unique” chance to win a growing slice of HNW wealth and compete more effectively against international rivals, a recent report says.

Global private banks such as UBS, Citi Private Bank, Julius Baer and JP Morgan have been quick to ride the Asian wealth-in-motion wave. However, Asia’s own commercial banks, such as DBS, OCBC and UOB, have a competitive advantage that goes beyond geographical proximity and a distribution footprint. 

The local players have also built trust with business owners after financing their companies for decades, argues LEK Consulting. The firm set out its thinking in a paper entitled How Asian Commercial Banks Can Capitalize on the Great Wealth Transfer.

Figures illustrate growth momentum among the “locals.” DBS Wealth Management expanded relationship management headcount by 13.8 per cent from 2023-25, and Bank of Singapore grew RM numbers 12.1 per cent, higher than Julius Baer, LGT, EFG Bank, JP Morgan, Morgan Stanley and Goldman Sachs, the report said. The only bank that beat these figures was Standard Chartered, the UK-listed group that counts Asia as its main earnings driver, with RM numbers surging 27.3 per cent. 

As the centre of economic gravity shifts eastward, it seems that the region’s commercial banks ought to enjoy the associated wealth story. WealthBriefingAsia spoke about the report to Justin Tan (pictured), a partner based in LEK’s Singapore office. He is also financial services sector leader for Asia.

“Commercial banks have successful private bank operations, and they are really coming to the fore. We thought that it would be good to recognise this,” Tan said.

“Commercial banks have to be sharpening propositions to clients to bring the best of the bank on the balance sheet side, and through planning. They cannot run away from the fact that the second generation are now all well-educated,” Tan said. Some banks have not quite reached this point yet, he continued. 

For years, the large international banks, such as Switzerland’s lenders, had strong product and service platforms with highly professional RMs used to handling ultra-HNW clients. 

The LEK report said the opportunity brought about by wealth in motion is considerable. 

“The question for commercial banks is whether they have the business model ready to capture the current opportunity. Success requires excelling across three levers: sharpening the value proposition across the client’s personal and corporate balance sheet, establishing the optimal organisational and coverage model to deliver it, and designing incentives that make cross-unit collaboration attractive and sustainable,” it said.

Different models
With commercial banks, relationships with clients as business owners is as important, if not more so, than their private banking side. These two elements are no longer kept separate. In the past, banks tended to want to keep the business/wealth elements apart to protect client privacy.

This is changing, Tan said. 

For example, commercial banks are in a strong position to view the client’s whole balance sheet. â€śThe one-bank model is nothing new: it sounds great in theory but [it is] not that easy.”

Some international banks have sought to grow on the ground in Asia via joint ventures, Tan said, adding that commercial banks, with existing footprints in countries, can take a different approach. 

“If you get 50 to 70 per cent of new [wealth] clients who are via referrals from the corporate banking side, then you don’t have to go out hunting,” Tan continued. The question is then how does a bank “broaden that relationship over time?”

There are challenges with commercial banks’ setups.

“We know that these institutions are quite siloed internally,” Tan said. Asked if internal politics inside commercial banks can be a challenge, he replied: “It is a problem but not unsolvable.”

There can be cultural and business differences between how Western banks tend to function and the approach of Asian counterparts. Western banks tend to be very “business unit-driven” while Asian banks are more about a team-based ethic, Tan said.

The JV approach
WBA asked Tan about the joint venture model that several banks, such as Julius Baer in the Thailand market, have used to enter the wealth market without having to devote major resources to starting on the ground from scratch.

“It is a low-cost way to target opportunities,” Tan said, noting that parties in JVs typically need to think of them as being limited by time with a clearly understood endpoint to manage expectations. 

“Some of the opportunities can diminish for both parties and they must look at the exit conditions. With these, the devil is in the detail,” he said. 

WBA asked Tan whether Asian banks are spending significantly on marketing as a share of revenue to drive attention towards their wealth and private banking offerings. “Overall, yes, the percentage spend is high but not as high as for luxury goods,” he said. “They are investing a lot on brands.” 

“Of course, everyone knows about UBS and Morgan Stanley…it is more about [their sponsorship of] annual events, such as Formula 1. Both [international and local commercial banks] are spending a similar amount as a percentage [on marketing] but the process is a bit different,” Tan concluded.