Mass Affluent Banking

Introduction

Although mass affluent customers reportedly can generate four times as much revenue as retail customers, this market remains a difficult one for banks to serve well while maintaining profitability. Banks with mass affluent propositions need to know what strategies for customer acquisition, increasing share of wallet, product and service proposition, and customer service work profitably.

Features and benefits

• Our Global Wealth Model data and forecasts tell you how many mass affluent clients are in your target market, helping you to plan for future business
• Extensive mass affluent customer survey data covering Asia-Pacific, Europe and North America highlights what your clients want from your service
• In-depth customer targeting and product/service strategies highlight how your competitors are capitalizing on the demands of mass affluents.
• Analysis of three business models: banking-led vs. investment-led; relationship management vs. non-advisory; free bundled vs. fee-based bundled models

Highlights

Asian mass affluents are fairly unconcerned with getting good interest rates on their transaction accounts, and somewhat unconcerned with getting the highest interest rate on their savings account. They tend not to choose their transaction account based on bank charges, as they are instead attracted by advertising and familiarity with the bank.

Among the five banks in Datamonitor's analysis that do not offer relationship managers, only one offers an interest-free overdraft. RBS Royalties Private gives clients a £500 interest-free overdraft, while the remaining players have various fees and conditions on their overdraft offers

Unlike their Asian counterparts, Western European mass affluents do not look to financial products to help reduce stress, although they very much demand that their FS provider makes it simple to manage their finances.

Your key questions answered

• How many mass affluent individuals are there in my target country?
• What do customers most value in a mass afluent service in my country?
• How are my competitors serving the mass afflunet client base?

Table Of Contents

OVERVIEW
Catalyst
Summary
Methodology

EXECUTIVE SUMMARY
While mass affluents worldwide do share some characteristics, their differences have important implications for banks attracting and serving them
Mass affluent customers in Asia Pacific are attracted by advertising and familiarity, and listen to friends and family when it comes to financial advice
Mass affluent customers in North America are happy looking after their own finances, but want customization around the financial products they use
Mass affluent customers in Western Europe are time-pressured and want their bank to look after their personal needs
All mass affluent populations will grow in the next five years, but the highest growth markets will be in Asia Pacific and the Middle East
The biggest future opportunities lie in the East

THE MASS AFFLUENT CLIENT
Defining the mass affluent customer
Regional mass affluent customer overview
Mass affluent customers in Asia Pacific
Mass affluent customers in North America
Mass affluent customers in Western Europe
Banking characteristics of the mass affluent client
Asian mass affluent clients are most likely to get financial advice from banks
Despite the proliferation of online banking, mass affluents use their branch to open accounts
Mass affluents are somewhat more rate-sensitive when choosing accounts compared to mass market consumers
Banking charges are less important to mass affluent clients than interest rates
Existing relationships matter to mass affluents when it comes to choosing a transaction account
Mass affluent motivations and decision triggers
Mass affluents want banks to make their lives easier and less stressful
Tailoring and control are important to mass affluents, which has important implications for bundled services
Advice and recommendations are moving out of the professional sphere for mass affluents
A bank's use of new technologies is expected by the mass affluent customer base
Mass affluents are time-poor and crave simplicity
The size of the mass affluent opportunity
There are more than 135 million mass affluents in 15 countries
The biggest future opportunities lie in the East

BUSINESS MODELS IN MASS AFFLUENT BANKING
The banking-led model versus investment-led model
The banking-led model
The investment-led model
The relationship management model versus the non-advisory model
The relationship management model
The non-advisory model
The "free" bundled model versus the fee-based bundled model
Mass affluents' financial decisions are dictated by price and cost
Mass affluent "privileges"

APPENDIX
Definitions
Mass affluent
Methodology
Global Wealth Model methodology
The UK sub-model
"Other countries" sub-model
Forecasting methodology
Datamonitor’s wealth numbers compared with other wealth numbers
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

TABLES

Table: Number of mass affluent individuals (000s), by country, 2005, 2009, and 2014f
Table: Number of mass affluent individuals (000s), by liquid asset band, Bahrain and UAE, 2009
Table: Number of mass affluent individuals (000s), by liquid asset band, US and Canada, 2009
Table: Number of mass affluent individuals (000s), by liquid asset band, UK, France, and Spain, 2009
Table: Number of mass affluent individuals (000s), by liquid asset band, Asia Pacific, 2009
Table: Banking-led mass affluent competitors
Table: Investment-led mass affluent competitors
Table: Mass affluents with home, buildings, and/or contents insurance, and travel insurance (%), by region

FIGURES

Figure: The greatest mass affluent opportunities will be in Asia Pacific and the Middle East
Figure: Likelihood of going to primary bank for advice on savings, and on other financial products in the next six months (%), by region
Figure: Respondents who opened their main transaction account in branch (%), by region
Figure: Around a third of mass affluents are rate-sensitive when it comes to savings accounts
Figure: Respondents who said that low banking charges were the reason for choosing their main transaction account (%), by region
Figure: Respondents who chose their main transaction account due to advertising, and due to an existing relationship with their bank (%), by region
Figure: Respondents who use financial products to help reduce stress levels (%), by region
Figure: Respondents who stated that it is important to feel looked after by their FS provider, that they like to be offered a range of services, and that they like financial products to be targeted at their age group (%), by region
Figure: TBK Wealth Management centers its entire marketing campaign around lifestages
Figure: Respondents who want more control over additional services, and who think their FS provider should allow them to customize the financial products they use (%), by region
Figure: Respondents who take advice on their finances from friends and family (%), by region
Figure: Respondents who agree that financial services should embrace new technologies, such as mobile applications or social media (%), by region
Figure: Respondents who stated they do not have time to effectively manage their finances, like other people to look after their finances for them, or agree that their FS provider must make it simple to manage their finances (%), by region
Figure: Several countries outside the US had sizable mass affluent populations in 2009
Figure: The greatest mass affluent opportunities will be in Asia Pacific and the Middle East
Figure: Relationship management-led versus non-advisory mass affluent competitors
Figure: Rating of an interest-free overdraft, and personal contact for queries, as most important aspect of a premium banking service (%), by region
Figure: "Free" bundled services versus the fee-based bundled services
Figure: Respondents who stated that their financial decisions are dictated by price and cost (%), by region
Figure: Respondents who do not wish to be charged a fee for basic banking services, who would rather pay a small fee for basic banking services than large overdraft fees, and who are happy to pay a fee for premium banking facilities (%), by region
Figure: Features of premium banking services, as placed in the top three most important by respondents (%), by region
Figure: Mass affluent services' FS-related perks compared