Developing a brand exclusively for wealthy customers and offering asset management services for individuals and families have emerged as a strategy of banks in recent years.

More intense competition In early July, Techcombank officially launched Techcombank Private, a privileged service for customers with a balance of US$1 million or more, or with total assets of VND25 billion on average in the last three months. This exclusive service provides financial and non-financial management solutions, including investment advice, inheritance planning, residence procedures, healthcare, and a range of associated privileges. Simultaneously, HDBank introduced HDBank Priority, a program titled “Enjoying Privileges, Increasing Benefits,” offering dedicated products with numerous privileges and benefits for customers and their relatives with total assets of VND2 billion or more at the bank. The bank provides exclusive consulting rooms with consultants specializing in various business areas, premium healthcare privileges, such as health and travel benefits, spending reimbursements, and higher interest rates for savings. Two years ago, the Bank for Investment and Development of Vietnam (BIDV) launched Private Banking, targeting affluent and ultra-high net worth customers. The service offers investment, insurance, savings, and associated conveniences and privileges. In March 2020, MBBank collaborated with the Swiss private bank Bordier, which specializes in asset management services for premium customers. This partnership led to the development of a special banking service for wealthy Vietnamese individuals with assets of US$1 million or more. The service includes banking packages, investment solutions, insurance options, credit facilities, asset planning, and international standard services across various aspects of life. The asset management needs of individuals and families are diverse, including investment, savings, future financial planning for children, asset preservation and management, financial independence, and inheritance planning. To cater to this special group of customers, banks have established dedicated centers or networks primarily in major cities. These transaction points, online applications, and home services provide VIP customers access to an ecosystem of diverse services tailored to their specific needs. In order to offer comprehensive premium services, banks can collaborate with international financial organizations that excel in asset management services. They can also sign cooperation agreements with local partners, such as insurance companies, securities firms, investment funds, or leverage the networks and services of their subsidiaries operating in these sectors. This approach enables banks to meet the diverse demands of customers while promoting their own products, thereby optimizing profitability per customer. In previous years, some banks introduced early services for high-income VIP customers, such as VIP offices operating on weekends and holidays, gold and diamond credit cards with associated conveniences, and higher savings interest rates for customers with substantial deposits. However, these services were often fragmented, and the customer base remained relatively small. Consequently, the expected success was not realized, leading to a reduction in the dedicated units serving this customer segment. Opportunities and challenges Nevertheless, with the rapidly increasing number of affluent individuals and ultra-high net worth individuals, banks have begun to realize the significant potential within this customer segment in the coming years. According to a report by real estate consulting firm Knight Frank, the number of ultra-high net worth individuals in Vietnam has nearly doubled from 2017 to 2022. In 2017, there were 583 Vietnamese individuals with net assets exceeding US$30 million, but this number rose to 1,059 in 2022, representing an 82% increase over five years. Knight Frank predicts that the number will reach 1,300 in 2027, a 22% increase compared to the current figure and a 122% increase over 10 years. Additionally, the number of Vietnamese individuals with assets of over US$1 million has increased by 70% in the past five years and is projected to surge by 173% over the 10-year period from 2017 to 2027. Looking at the asset management industry’s history in markets similar to Vietnam, such as South Korea, Thailand, China, and Singapore, it is evident that the demand for asset management services has increased after a period of high economic growth accompanied by rising incomes and assets. This experience indicates the significant opportunity for the development of this industry in Vietnam in the future. By late June, the total deposits in the banking system had exceeded VND12,600 trillion, with over half of it being deposits from individuals. With the value of deposits reaching 2.18 times the capitalization of the stock market, in comparison to many developed economies or even regional countries like Thailand and Indonesia where the deposit value is less than 100% of the stock market capitalization, there remains ample room for growth in the asset management industry and potential demand for asset management services in Vietnam. In a previous report, auditing company PwC stated that the capital flow from asset management is a driver for the economy and businesses. It represents investment capital that generates future income and provides for the future. Asset management, therefore, not only helps individuals increase their assets but also contributes to economic growth, as a significant amount of assets in this segment are invested in funds for national infrastructure development. However, the development of the asset management industry also poses challenges. Firstly, the creation of superior and highly secure technical applications that fully meet customer demands and offer strong connectivity is no easy task. Banks may need to make substantial investments in separate applications and utilities dedicated to customers in this segment, even though the customer base in the initial phase may be small. The second challenge arises from the need for high-quality human resources who possess in-depth knowledge and experience as consultants. These individuals must have the qualifications and capacity to provide sound and attractive advice and strategies for asset preservation and investment. Given that investment channels in Vietnam still have limitations and higher risks compared to other developed markets, this presents a significant challenge. Recent scandals in investment channels, such as corporate bonds advised, underwritten, and distributed by banks and securities companies, widespread stock manipulation and insider trading in the stock market, slow progress and the lack of legal status of real estate projects, and instances of bank staff misleading customers to convert deposits into investment-linked insurance products, have seriously impacted customer confidence, particularly among VIP customers. Consequently, wealthy individuals may exercise caution when it comes to asset management in the future. Banks will face fierce competition not only from investment funds but also from securities companies, many of which have developed asset management services in recent years. These companies possess analytical capabilities, in-depth knowledge of various areas, particularly securities investment, and, most importantly, the ability to provide diverse investment advice for different customer segments over many years, giving them certain advantages.