Singapore’s underbanked mass affluent market is one of Asia's most lucrative opportunities for wealth managers, with 40% not yet with priority accounts, according to a new study.

Singapore’s mass affluent
market, that defined as those with more than S$200,000 ($158,000) in investible
assets, is dominated by a very small number of institutions but is one of Asia's most lucrative opportunities, according to a new study.

By far the most prominent
lender in this area is DBS, which between its affluent Treasures business and
its POSBank subsidiary (formerly Post Office Savings Bank) owns 53 per cent of the market,
according to a new study from intelligence provider RFi.

However there is
still much wealth to be tapped. The report showed that 40 per cent of the mass
affluent retail banking market do not have a priority or private banking
relationship.

Of those who do
have a priority banking relationship, 60 per cent hold this with their main
financial institution, indicating a strong relationship between their retail
bank and their priority bank, said the report.

The remaining 40
per cent that do not hold their priority banking relationships with their main financial institution, are potentially seeking out priority programs that best suit their needs,
regardless of the bank.

DBS Treasures
holds the highest market share of priority banking relationships in the market
with 18 per cent share, as well as the equal highest share of ‘main priority
banking relationship’ status, with a 24 per cent share.

Standard
Chartered has an equally high share of the main priority bank status once their
Priority and Preferred program shares are combined.

Regarding the
benefits they receive from their priority program, overall priority banking
customers consider priority branches to be the most highly valued. However,
foreign bank customers tend to value wealth management advice and relationship
management the most.

Mass affluent
customers consider themselves likely to stop using around a quarter of the
credit cards currently in the market during 2012, although only a tenth are
considered very likely to be at risk.

The highest share
of mortgages by both number and value of loans is held by DBS, with a 24 per
cent share of the number of mortgages and a fifth share of the value. Standard
Chartered and HSBC have a higher share by value than by number, indicating they
are taking on higher value loans than their competitors.

There is
potential for significant growth within the mass affluent wealth management sector,
with the finding that 47 per cent of mass affluent retail banking customers did
not have a financial plan in place with a financial advisor in 2011.

Residential
property tends to account for over a third of mass affluent investors’ wealth,
with managed funds and domestic shares accounting for around a fifth each, said
the report.

RFi’s Asia Pacific Research Director, Sheree Rudinger,
said; “With over 40 per cent of the mass affluent segment not currently members
of either a priority or private banking program, there is significant
opportunity for banks to grow their market share through new acquisition.
Internal cross-selling has worked well for some of the larger players in the
priority banking space, and external acquisition can focus on the benefits that
are most valued by current priority banking clients; priority banking branches
and wealth management advice”.