PETALING JAYA: HSBC Group, which sees Malaysia as an important market for its wealth management business in Asia, is upping its digital initiatives to spur its wealth management business in the country.
Spelling out the initiatives for the country’s wealth management business, the group’s chief executive for wealth and personal banking Nuno Matos told StarBiz that: “We are digitising at scale to put a ‘bank in our customers’ pockets’ and view digitisation as an important growth lever for our wealth business in Malaysia.
“HSBC Malaysia expects more than 90% of our retail transactions to be done through digital channels by the end of 2022, he said, adding that this would also accelerate its wealth management business going forward.”
In the first quarter of this year, for retail customers specifically, the bank saw 21.75% growth in mobile active users versus the same period last year. E-payment transactions have also seen a 13.45% increase in transactions in the said quarter compared with the same period last year.
More than 90% of HSBC Retail foreign exchange conversion transactions were done through digital channels (personal Internet banking and mobile) in 2021. All these digital initiatives have laid the groundwork for HSBC’s wealth management expansion.
Last year, he said HSBC announced plans to invest over US$3.5bil (RM15.2bil) over a five-year period to accelerate the growth of its wealth and personal banking business in Asia, adding that Malaysia is a beneficiary as the group expands into Asean.
HSBC Malaysia building
Matos said the bank has seen total visits to its Wealth Insights Hub in Malaysia increase to 91,080 in 2021 from 36,804 in 2019. This translates to a strong compounded annual growth rate (CAGR) of more than 50% per annum.
He said HSBC is also driving the sustainable finance agenda and transition to net-zero through its wealth proposition.
The bank currently offers environmental, social and governance (ESG) unit trust funds as well as ESG-linked structured investments for investors who are looking to build their wealth while maintaining a focus on sustainability.
From December 2020 to December 2021, HSBC Malaysia’s Unit Trust ESG assets specifically grew 124%.
He said HSBC is looking to build more partnerships with players in the technology space to expand the range of digital wealth capabilities.
To this end, he said HSBC is currently in partnership with Allianz Life Insurance Malaysia Bhd and FWD Takaful Berhad to provide insurance and takaful solutions to meet customers’ protection needs.
In the area of asset management, HSBC collaborates with renowned asset managers such as Principal Asset Management, Manulife Asset Management, RHB Asset Management to provide leading wealth solutions to meet customers’ diversification needs.
On its wealth management revenue, Matos said since embarking on HSBC’s Asia Wealth strategy, the bank’s wealth business in Malaysia has grown significantly.
“Our investment revenue (for the wealth business) for instance in 2021 was 27.2% higher than 2020 driven by a more than 30% improvement in both unit trusts and structured investments income.
“This positive momentum can be attributed to the accelerated pace of our digital banking transformation and strong mobile banking adoption among our customers.
“Looking ahead, we will continue to make considerable investments in technology, products, and people and invest to build the country as a significant international wealth destination,” he added.
Without disclosing the amount, he said the bank aims to double its assets under management (AUM) in Malaysia by 2025 with a specific focus on areas such as unit trusts and structured investments while also accelerating its mobile wealth and digital capabilities.
In terms of headcount in Asia, Matos said HSBC hired over 1,200 client-facing roles for the Asia Wealth business in 2021 and remain on track to add 5,000 net by 2025.
“We’re deploying new digital wealth and banking tools at pace and scale to build a truly hybrid client experience, blending wealth experts with digital empowerment and convenience. These enhancements are for all wealth segments and address needs across all stages of the wealth lifecycle,” he said.
On its wealth management growth drivers, Matos said Malaysia’s rising income levels and higher life expectancy are driving an expanding and yet underpenetrated wealth management sector.
This is reflected in the expansion of the affluent segment in the country, he added.
According to the Boston Consulting Group, Malaysia’s affluent segment is faring well, continuing on an upward growth trajectory despite market challenges. Malaysia accounts for 17% of wealth in South-East Asia, which is forecast to increase at a CAGR of 4.5% in the next five years compared with a global CAGR of 3.2% for the same period.
According to a report by KPMG, with strong Internet and smartphone penetration and the government’s push to accelerate digitalisation, Malaysian banks have increased their tech spend to develop advanced wealth management products and journeys for an enhanced digital customer experience.