19 August 2019 |

Bank of Singapore sheds ‘pure play’ skin as Tan plots Greater China growth

Text size

Gone are the days when Bank of Singapore leaned hard on its ‘pure play’ branding in a market dominated by large integrated lenders. Today, it is at pains to play up its intragroup capabilities — and nowhere more so than in Greater China, where Bank of Singapore as part of the wider OCBC Group, feels it has the most room to grow.

In a nutshell, the private bank has abandoned its standalone status in favour of what Derrick Tan, chief executive Hong Kong branch and global market head for Greater China and North Asia, calls a “360-degree integrated model”, and will prioritise bank-wide synergies across consumer, corporate, IBD, and treasury and markets to make headway in the competitive Greater China space.

“When [Samuel Tsien] became the group CEO, there was a change in strategy … in terms of how can Bank of Singapore with the vast network of OCBC Group help our clients to grow their business, grow their personal wealth, and also tap OCBC’s large pool of clients,” revealed Tan at an OCBC Bank analyst and media briefing in Hong Kong last week, where the focus was on the group’s plans for the Greater Bay Area.

The rationale behind the change largely stems from OCBC’s strategic acquisition of Wing Hang in 2014 — a deal that was wrapped up two years later when OCBC Bank (China) and Wing Hang Bank (China) were merged — and the nature of its client base in Hong Kong, whose needs go beyond pure wealth management.

“Most of our clients here are HNW and UHNW, most of them are entrepreneurs or business [owners], so what do they need? Entrepreneurs need corporate banking, they need loans, mortgage loans, and businessmen need commercial banking,” explained Tan.

“So we will approach this from a 360-degree point of view in terms of how we [engage] our clients with our … group and network, and the branches we have in Indonesia, Malaysia, and Singapore to help our clients expand beyond their country.”

Tan, who spoke for 15 minutes, did not specify any structural or operational changes the private bank has made to deliver this integrated service. However, he did point out that between 2013 and 2018, Bank of Singapore’s penetration of the Greater China market had improved, including a tripling of AUM, a 2.5-times increase in AUM per client, and a 2.8-times increase in revenue. It was also the fastest-growing part of the private bank’s business over this period — albeit likely from a small base relative to its Singapore-based activities.

“In terms of AUM and the business impact, we grew from 18% to close to 30% [which] shows that when the group focused on China, Bank of Singapore actually benefitted as well, especially with OCBC Wing Hang,” he said.

Clearly, though, a business-as-usual approach to the Greater China market was never going to sustain these growth rates in a landscape where incumbent leaders such as HSBC, Chinese entrants, and hometown rival DBS are pouring in resources with an eye on the Greater Bay Area initiative.

Leading the charge
Tan’s own appointment in early 2018 was a signal of intent from Bank of Singapore given the pivotal role he played in setting up the bank’s Dubai-based operations. He is widely regarded as ambitious, business-savvy, and personable, which is precisely what Bank of Singapore needs in a leader if it is to make quick and deep inroads in Hong Kong.

Tan has ramped up hiring, not only in terms of frontline bankers but also in credit risk and product management. Headcount in the product management group alone went from four to over 30 since he took over, while the overall Greater China headcount between 2013 and 2018 jumped from 186 to 401, likely buoyed by recent activities.

He took two floors at Hong Kong’s One IFC and redesigned the private bank’s client-facing offices according to his personal specifications. Efforts have also been made by the bank to strengthen internal culture with the installation of collaboration areas and the launching of a new talent incubation programme.

That’s one piece of the puzzle. The other concerns market strategy with a focus on segments, product, and partnerships.

Independent asset managers will take centre stage under Tan’s vision for the business over the next few years. He spent the better part of 2018 establishing an IAM desk in Hong Kong and now, with an up-and-running “IAM Excellence Centre”, he intends to tap this growing segment via B2B, B2C, and B2B2C channels.

“I think that there is going to be a big shift into this pool and … we expect 30% of ultra high net worth clients’ wealth to be managed by IAMs in the next five to 10 years,” he said, adding that in Greater China, Bank of Singapore tripled its IAM-specific AUM and revenue within a year.

Plans are in place to harvest wealth preservation and succession planning opportunities from Chinese ultras, which means doing more with group-connected clients whose primary relationship may not be with Bank of Singapore, but where the private bank believes it can add value.

Meanwhile, the millennial generation — a segment Tan described as “totally different” in terms of expectations and mode of interaction — will be engaged via “lifestyle focused content and activities”, and are a primary driver behind the bank’s digital strategy. This all goes towards positioning banking “as a lifestyle”, according to Tan.

“You cannot just tell people to bank for banking,” he said. “Whichever private bank is able to embed banking into the client’s lifestyle will be able to capture the share of wallet.”

In line with this lifestyle objective, Tan said that strategic partnerships with established brand ecosystems in mainland China, Hong Kong, and Taiwan will be announced in due course.