SCB revamps services for its wealthier customers

New products sought by those who inherit their high net worth

Siam Commercial Bank has upgraded its private banking services, covering customers with more than Bt50 million in assets under management, to bring them in line with the bank's global investment philosophy and cater to the risk appetite and investment objectives of people who are getting richer, including inherited-wealth customers.

Heritage-wealth families have traditionally wanted the bank to protect their wealth and invest it in conservative products such as deposits. However, the more advanced market has educated these clients to look beyond their families' wealth protection because the returns from conservative investment at present are unable to beat inflation, said Lalitphat Toranavikrai, head of private banking at SCB.

The strategy of SCB's private-banking unit has, therefore, changed given that inherited-wealth customers and other clients whose wealth is growing now have a better understanding of risk and appreciate the need for a wider range of investment options.

There are many instruments that give better returns than deposits, and the bank's asset-allocation service offers appropriate investment options, she said.

The return on investment for conservative products is about 4-5 per cent per annum, while the return on aggressive products should be 7-8 per cent. This could be higher or lower based on a client's risk appetite, the investment objective and the period of investment, she added.

SCB spent three years upgrading its private banking in line with its standard of global investment philosophy, said Yol Phokasub, senior executive vice president and head of the bank's retail banking group.

The philosophy and associated strategy consist of understanding client needs and insights; defining client investment objectives; setting up an Investment Intelligence Centre (IIC) to develop asset-allocation plans; implementing solutions in accordance with the risk appetite of customers; and monitoring and reviewing progress.

The relationship manager at a branch has until recently played the main role in looking after private banking customers, but nowadays this might not be enough to respond to the new requirements of the wealthy, he said.

The bank has, therefore, set up a "private banker" service and an IIC, apart from the relationship manager service, to look after wealthy customers.

SCB already has 40 of these private bankers, which it targets increasing to 100.

Lalitphat explained that a relationship manager is like a general doctor, while a private banker is a specialist doctor who closely helps manage a client's financial investment in accordance with risk appetite and desired return.

The IIC, meanwhile, was set up to follow the global financial market and implement investment-portfolio strategy and product solutions for customers, she said.

The centre will also provide the private bankers with in-depth information to help them define asset allocation and return on investment as per customer expectations.

She said the fact that the Deposit Protection Agency's current insurance limit of Bt50 million per account per bank would soon fall to Bt1 million had had a major influence on this kind of client, with rich customers having to find financial instruments to protect and increase their wealth.

As private banking at each bank generally offers much the same in terms of products, services and benchmark returns on investment that must beat inflation, she said that to get an edge SCB was now focusing on building its relationship with and gaining the trust of customers.

"The ability to provide investment solutions to meet customers' risk appetite, and quick service and advice, is our strength because around 70-80 per cent of private banking customers are businessmen that do not have enough time to focus on personal or family asset allocations," Lalitphat said.

SCB oversees about 7,000 private banking customers with combined assets under management of more than Bt500 billion.