How do you assess the potential of Vietnam in the private banking sector, which serves the needs of high-net-worth individuals (HNWI)?
|Le Xuan Vu, member of the Board of Management at Military Bank (MB) |
According to German analysts Statista, the annual growth rate of Vietnam’s middle class was 10.1 per cent between 2016 and 2021, making it the fastest-growing country in Southeast Asia.
From a recent report by the World Data Lab in the UK, Vietnam will boast 23.2 million more middle-class individuals by 2030 than it already has (average daily expenditure per capita is between $11-$110 per day). Vietnam is only ranked third in Southeast Asia in terms of the number of middle-class individuals, behind only Indonesia (with 75.8 million people) and the Philippines (37.5 million people), respectively.
The Vietnamese market has received little attention from multinationals. In the absence of a synchronised approach, domestic credit institutions have just recently begun to develop a variety of fragmented offerings. Because of this, the opportunity for high-end financial services, particularly finance, investment, and insurance consulting, to serve the middle-class remains enormous.
What are the biggest challenges that banks must overcome in order to successfully carry out private and priority banking services and how would MB address these?
Delivering banking and financial services to affluent clientele has long been a priority for a number of banks across the globe. Nonetheless, Vietnam has just recently begun to concentrate on complete financial solutions for the private and priority client segments. This highlights the present incoherent legislative framework, posing implementation difficulties.
Vietnam’s investment product offering remains narrow, failing to fulfil clients’ demand for diversifying investment channels and mitigating risks. MB Private is a pioneer in providing private banking services tailored to each customer. The bank’s competitive edge is a full package of financial services (including securities, insurance, and wealth management) within MB Group’s ecosystem. This provides a substantial strength over other institutions.
In addition, the bank is collaborating with Bordier & Cie, a Swiss boutique private bank with over 170 years of expertise in providing bespoke financial services to generations of families around the world, as well as other notable partners, to facilitate private customers with international financial consulting and management services.
What is your take on the coronavirus pandemic’s impact on the private banking sector in Vietnam?
Customers’ businesses experience growth deceleration, order shortages, and loss of customers, negatively affecting trade. The value of financial assets and accumulated real estate value fluctuate remarkably, leading to a decrease in net asset value.
There have been other consequences of the pandemic on private banking in Vietnam. Firstly, customers’ finances being adversely impacted – resulting in a reduction in the size of the customer’s assets, revenue, and efficiency – has resulted in both positive and negative effects on the operation of private banking. Face-to-face encounters are also becoming rarer, changing customers’ habits and ways of interaction.
On the other hand, the outbreak has also benefited the bank’s operations. It has altered the ways customers manage their assets, as seen by the increased need for professionals. These experts will help them manage their assets effectively, so they are allowed to spend more time on their business, family, and healthcare.
In a volatile climate, the importance of an appropriate asset allocation cannot be overstated. In response to the pandemic, financial services and products tailored to each individual’s demands and risk appetite have been a major focus of MB Private.
What has shifted in the behaviour of Vietnamese HNWI in comparison to your expectations?
Customers in this country have begun to alter their asset management practices, resulting in an increased need for vital expertise. These experts will assist them in properly managing their assets, allowing them to devote more time to their career, family, and healthcare. Customers are also increasingly interested in learning more about financial management solutions. Furthermore, we notice that more customers have placed their faith in financial experts; they are comfortable providing information about their family and personal requirements in order for the expert team to properly comprehend the customers’ tales and provide helpful suggestions.