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The emergence of direct access desks, or DACs, at private banks is taking away treasury business from old school corporate banking-styled relationship managers – for the better of the industry.

Client accounts of direct access desks (DAC) services are very transactional by nature with concentrated exposure around specific positions, currencies, and sectors for a wide variety of purposes including financing, cash management, and hedging. If this sounds like treasury services, it’s because it is.

First generation owners of Asia’s family-owned businesses form a core segment of the wealth management industry in the region. Behaviourally, these high net worth individuals differ profoundly from other segments such as multi-generational wealth in the west or contemporary entrepreneurs.

Dual Role

This is due to the fact that wealth from this segment was neither passed down – as it is first generation – nor created quickly, as it originates from gradual accumulation through traditional cash cows like manufacturing or export trading.

Naturally, client behavior exhibits a dual role between business and personal needs. In fact, many of Asia’s family offices are run by individuals with treasury backgrounds (if not the treasurer him or herself), differing from that of the West's old money which hires asset management talent in addition to their CFOs.

Three Birds, One Stone

In the short-term, corporate banking-styled relationship managers that have traditionally relied on treasury-like demand may experience meaningful disruption. Discretionary portfolio management (DPM), wealth planning and alternatives are amongst many of the headline opportunities and priorities which many are pursuing with limited experience if not for the first time ever.

But if the industry is able to successfully export such trading demand, which requires more technical expertise, from relationship managers to asset class specialists, it could potentially kill three birds with one stone.

Greater Volumes

Firstly, this could prove to be a potent step towards monetizing the bank’s expertise. With the exception of the most sophisticated relationship managers, many are already effectively utilizing bank resources to capture demand, be it from existing content or by directly consulting specialists before delivering key talking points and ideas to clients. An effective effort to transfer demand to specialists and content makers themselves may lead not only to higher margins due to perceived value from a more organized and structured solution but also greater volumes from the diversity of ideas and more balance sheet extensions.

Secondly, risk management is significantly enhanced with a more systematic approach being deployed through DAC desks. Though time will tell how specialist outperform (or not) when stacked up against relationship managers, compliance risk is undoubtedly a major factor that is better contained.

Hitting Specific Sectors