Vontobel launched a growth strategy in Asia earlier this year. Surprisingly, the business with Asian clients is already profitable in private banking. How?
The Zurich-based private bank has long tussled with the question of Asia – mainly because it doesn't have the financial firepower of larger rivals like Julius Baer or Credit Suisse to bankroll a major offensive in the region.
Earlier this year, it disclosed a goal to double business in Asia by 2020, albeit mainly from other activities than private banking.
Now, the operating chief of Vontobel’s private bank has revealed that business with wealthy clients is profitable in Asia, and questioned how larger firms can turn a profit.
Niche Focus
«Our hypothesis is that smaller players, with a clear niche strategy and a clear focus on clients – like Vontobel – are profitable in Asia,» Lukas Weber of Vontobel said at a conference in Zurich hosted by wealth management platform Hubbis. Weber has been operating chief for the firm’s private banking arm for nearly two years.
Vontobel’s secret? No licensed booking center in either Hong Kong or Singapore, and little costly overheads for staff and infrastructure in Asia.
«We at Vontobel are very cautious in building up infrastructure and complexity – and we do not have operational legacy. Instead, we want to be very lean.»
As a result, the bank offers cross-border banking out of Switzerland, and says it relied heavily on technology to stay close to clients.
Swiss Haven
«In our cross-border business model, 'Swissness' and Switzerland play a fundamental role. One of our target segment in Asia is what we call the 'global diversifier' because we see clients who do not just diversify across asset classes, but who also diversify their banking relationships and book part of their wealth in other, safe jurisdictions,» Weber says.
Swiss banks have long been prized for their solid capital, geographical safe haven and access to an unpegged, strong currency.
The approach makes Vontobel an anomaly in Asia, where rivals have poured millions into building up offices and advisor forces to tap into the fastest-growing market of wealthy clients.
Weber questioned whether rivals larger than Vontobel – a minnow in the private banking world – and smaller than powerhouses like UBS and Citi, could turn a profit.
Rivals Turning a Profit?
«I would challenge whether the mid-sized players – 'in-between' the very large firms and the boutiques – really are profitable,» he said.
UBS and Credit Suisse have in past said they are profitable in the region, and EFG’s chairman John Williamson disclosed that bank is also in the black in Asia.
Weber said making use of digital channels is key to connecting with clients in Asia from Zurich.
«We have digitized support available to complement our personal service, also on the long distance between Switzerland and Asia. We are even piloting secure video advice out of Switzerland.»
«All these aspects are changing things dramatically. And we observe clients being very eager to use these new opportunities.»
