3 key issues Southeast Asian wealth managers must grapple with in a post-COVID world

Despite the economic disruption of the pandemic, the future of wealth management across Southeast Asia looks bright. Together, the 10 Southeast Asian markets make up the world’s fifth-largest economy with a multi-trillion US dollar portfolio of assets under management. 

Yet wealth managers will not be able to capitalize on the region’s opportunities by continuing with business as usual. Even before COVID-19, FinTechs and super apps were starting to change thinking and non-traditional players were applying for digital banking licenses. Now the pandemic has changed the game, even more, making app-based transactions and digital relationships mainstream and shifting consumer values.

According to the latest EY Future Consumer Index, 50% of consumers expect their lives to change significantly in the future. Even before the crisis, Southeast Asian consumers were evolving quickly. The Index suggests that process will now accelerate. Asian investors are already the most likely in the world to leverage digital solutions for wealth management according to EY’s research. Consumer expectations of their wealth providers are changing fast and, given the propensity to switch, wealth managers must adapt swiftly.

Similar trends in a diverse region

From an economic, demographic, and infrastructure perspective, each Southeast Asian market is quite distinct. Vast differences characterize the region, from the GDP per capita in Singapore is more than 50 times greater than some of its neighboring states, to the vast size of Indonesia’s growing middle class, to the sweet spot of Thailand’s rapid movement from a low-income country to having Southeast Asian’s second highest GDP per capita in less than a generation.

However, the three issues wealth managers must address to operate effectively across Southeast Asia are universal – just as important in Thailand as they are in Singapore.

1. Segment the wealth continuum – Wealth managers should rethink how they segment and serve customers across the wealth continuum, providing the right services to the right segment at the right price point in a compliant manner.

Southeast Asian consumers are hungry to access wealth services via apps and online. This means many wealth relationship interactions can move to apps, enabling a low-cost, always-on relationship that can become increasingly personalized once data patterns are analyzed.

High net worth clients and older clients may still want to speak to a trusted advisor – but, in a post-pandemic world, these relationships may move to phone or video-based interactions and not face-to-face meetings, reducing the need for office space.

Only ultra-high net worth individuals will be afforded the current levels of relationship managers interaction – and some of them may still prefer digital or virtual interactions, especially as inter-generational wealth transfer progresses

Wealth managers should start asking themselves: To what extent will digital channels become the norm for client interactions, and how will this lead to us rationalizing our existing physical channels? If our biggest fixed cost is headcount and branches, how can digitization improve our cost structure?

At the same time, wealth managers should get to know their customers better, building out client profiles beyond just assets and simple demographics. That 28-year-old Asian young woman may only have US$10,000 invested with you – but she might have US$100,000 in another bank. Also, any human interaction this customer has with you should be with an appropriate peer – not a 58-year-old, European man for the above example.  

2. Reinvent distribution – Distribution channels may change in each market, for each segment.

This is why major financial institutions are looking to invest or partner with the leading regional super-apps and other players, including virtual banks and insurance networks. Wealth managers are also considering their options for harnessing the technology platforms and customer bases of other ecosystem players. While distribution is a key focus, these firms will also likely tap on data and analytics to learn more about potential customers and tailor their solutions. In this world, lifestyle solutions will become increasingly popular as data enables more relevant, personalized, and timely financial offerings.

3. Look at wellbeing – As the region’s economies begin to recover from the crisis, a groundswell of interest in a broader notion of financial wellbeing is likely to emerge, bringing the individual’s wealth and health needs together.

The attitudes of consumers towards all aspects of financial wellbeing are likely to change. This will create opportunities for wealth managers and insurers to build convenient wealth services into lifestyle purchases. For example, the ability to save money for, buy, and insure a holiday should be available in one place – on one, trusted platform where consumers plan and achieve their wealth and health goals. Perhaps a goal-based wealth platform will be the starting point for the customer journey instead of the traditional cash and savings account (CASA)?

This model will change traditional customer relationships. Insurers, who often had no customer contact between policy sale and claim/expiry, will start to build digital relationships based on the data customers are willing to share.

It's time to decide what role you want to play in this future market. Will you be a product manufacturer or a distributor (who owns the customer relationship)? Will you get there by expanding or partnering? And, most importantly, how will you differentiate your brand?

In the last few years, we’ve seen a shift of capital toward organizations with a clear long-term value strategy anchored by an authentic purpose. In the aftermath of the pandemic, Southeast Asian consumers will demand brands with a clear purpose that aligns with their values – and reject those that don’t.

Where does your purpose intersect with your wealth continuum, distribution, and wellbeing strategies? How will you embed that purpose at the heart of your transformation, engaging your customers, employees, and wider ecosystem in the process? 

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.