This is a sponsored article from ICE.
Magnus Cattan,vice president, head of client development, Asia Pacific
Asia Pacific is a rising powerhouse, accounting for ~42% (or US$218 trillion) of total global wealth1. To cater to a rapidly growing population of ultra high net worth investors, more than one-third (40%) of Asia Pacific family offices were launched in the last decade alone, according to Capgemini2. Hong Kong and Singapore are spearheading the region as wealth havens and competition is intensifying among wealth managers and private banks vying to serve this emerging cohort.
However, local investors’ appetite for risk and return, product preferences and adoption of digital technology can be radically different to US and European investors.
This creates a unique challenge for wealth management firms and private banks to meet the needs of investors across the region.
Customisation: A higher appetite for risk and structured products
Generating investment returns has become more challenging in recent times. Slower economic growth, geopolitical tensions and higher interest rates have combined to form stiff headwinds.
These factors also present new opportunities.
With higher interest rates, there has been a shift towards fixed income products. Wealth managers and private banks that offer new bond trading opportunities or structured credit have been gaining an advantage.
It takes a nimble approach, given inflation may have peaked. While many Asian private bank client portfolios are traditionally asset-heavy, they also appear to have an appetite for more complex structured products in equity derivatives and foreign exchange than investors in Europe and the US. Bespoke strategies that can generate alpha have a receptive audience.
These more complex structured products need a foundation of quality data. ICE offers broad asset class and speciality data sets, including data for equity and digital assets, and proprietary pricing for fixed income, OTC derivatives and structured products. Evaluated pricing and reference data are offered on a real-time, intraday and end-of-day basis, providing a solid foundation for these products.
Digitisation: A transformation reshaping the industry
With rapid adoption of mobile technology, digital platforms and a tech-savvy consumer base, Asia is at the forefront of the fintech revolution.
Basic offerings, such as portfolio management and online statements, are no longer enough. Instead, consumers want investor dashboards to make their trading experience more intuitive, generate portfolio recommendations and suggest new strategies. These dashboards include features such as trading capabilities, robo-advisory and virtual interactions.
Sophisticated data and analytics underpin these digital tools, enhancing their effectiveness. For instance, one firm recently used ICE bond data to power a digital tool that allows investors to analyse potential fixed income returns and switch to higher-returning sectors. This was particularly useful as interest rates climbed in the wake of the pandemic.
In a similar vein, private bank relationship managers can automate parts of their workflow by using ICE’s intraday indicative bond pricing data – information which allows them to eliminate manual processes with dealing desks and communicate with clients directly. The feed also gives private bank clients direct access to their investment analytics, empowering them with real-time insights.
Rising regulation: Enhancing transparency and protecting investors
The regulatory landscape in Asia is evolving to accommodate technological innovation, investor protection, climate-related factors and more.
Many wealth managers and private banks serve a diverse client base ranging from high net worth to ultra high net worth individuals and family offices. Each segment has distinct preferences and risk profiles. Here, product risk ratings can provide investors with standardised information about the risk associated with a given investment. ICE provides reference data that wealth managers and private banks can use to create proprietary product risk ratings.
In terms of the compliance landscape, regulatory bodies worldwide are introducing policies to promote sustainable business practices and address environmental and social issues. Hong Kong, Japan and Singapore recently stated they would consider incorporating the International Sustainability Standards Board’s new sustainability disclosure standards in 20253. At the same time, companies face increasing pressure from customers, investors and business partners to demonstrate active management of climate, social and governance risks.
ICE provides a range of climate data, tools and indices, allowing investors to incorporate ESG performance, climate risk and the shift to net zero emissions into their portfolio decisions.
While predicting shifts in investor preference is always difficult, certain fundamentals remain: wealth managers and private banks will continue to need high-quality data, technology and analytics to meet their clients’ evolving demands.
To learn more about ICE’s solutions for wealth managers and private banks, click here.
Footnotes
1 Woetzel, L., & Sengupta, J. (2022). Asia-Pacific should use its increasing wealth more productively. McKinsey & Company.
2 Global high-net-worth population and wealth back to record levels despite global instability. (2024, June 06).
3 ESG in APAC: 3 Trends to Watch in 2024 | White & Case LLP. (2024, June 11).
This is a sponsored article from ICE.
