High-end lending in higher demand

International and local lenders increasing their efforts to offer exclusive banking services to wealthy, high-end customers.(illustration photo)

The affluent population in Vietnam is growing faster than anywhere else, driven by the country’s dynamic economy, higher savings, and new wealth creation. Fresh data from the World Bank reveals that 70 per cent of Vietnam’s population is under 35 years old and its emerging middle class, which accounts for 13 per cent of the population, is expected to reach 26 per cent by 2026.

According to London-based estate agency, residential, and commercial property consultancy Knight Frank LLP’s Wealth Report 2020, Vietnam ranks second among the world’s top wealth markets in terms of very high net worth (VHNW) individuals over the past decade. The country’s average annual growth rate of those with a net worth between $5-30 million, categorised as the VHNW population, reached 13.9 per cent during the 2010-2019 period.

Through the years, this growing affluent segment with highly mobile individuals represents a significant opportunity for financial institutions to capture.

Some prestigious banks have offered such clients a host of top-notch, well-tailored services, including Vietnamese lenders such as Vietcombank and MB, or international banks such as Standard Chartered, Shinhan Bank, Citibank, UOB, HSBC, and Woori Bank.

“Together with traditional deposit products, they have diverse needs, such as family wellbeing, global connectivity, financial advice, protection, overseas education, and retirement savings plan,” said Pramoth Rajendran, country head of Wealth and Personal Banking at HSBC Vietnam. “We will put the technology that internationally minded-clients need to manage their banking activities in their pocket, alongside exceptional people who provide advice and help to solve more complex challenges.”

Fred Lim, country head of Retail Banking at UOB Vietnam explained, “Having built wealth for themselves, the affluent in Vietnam seek to preserve and to protect their assets so that they can take care of their family and fulfil their passions. They prefer personalised products and services that are tailored to their specific financial and lifestyle needs.”

Lim added that the bank appreciates what motivates and influences their customers and offers them financial advice and solutions to suit their needs, as well as a suite of lifestyle privileges from travel and healthcare to golfing activities. “We also have strategic collaborations with schools and educational groups to provide educational opportunities to our customers’ children,” Lim added.

Lam Vu Duc, head of Private Banking Centre, Retail Banking Division at MB, told VIR, “Besides standard services, we are ramping up our efforts to bring a delightful and rewarding banking experience to our wealthy, high-end customers, who only account for 5-10 per cent of the retail segment but can generate 60-70 per cent of the sector’s revenue.”

Notwithstanding, it is not easy for banks to serve this segment because of international integration and the complexity of financial and monetary operations.

Duc also expressed his concern that legal framework challenges still colour the landscape, as the current regulations on structured products and investment services are still limited. Moreover, an increasing number of banks jumping on this bandwagon are creating intense competition. Risks of money laundering also linger, since Vietnam is still progressing to build more stringent regulations.

Meanwhile, a widespread money-laundering scandal relating to private banking services has roiled European banks including Danske Bank, Latvia’s ABLV, and Deutsche Bank, with most of the suspicious funds stemming from Asian countries.