CIB: Seizing the wealth management opportunity in China
Industrial Bank of China’s (CIB) private banking business has been growing from strength to strength over the past decade, supporting its ambition of being the leading wealth manger to the ever-expanding universe of high-net-worth Chinese entrepreneurs.
CIB is one the world’s largest banking institutions, but while scale is important, the bank is committed to applying a boutique model to its private banking business, which is proving to be a success. At the core of that approach is a commitment to provide a comprehensive range of tailored financial solutions to wealthy individuals, and a focus on supporting the type of stable, long term wealth creation for its clients that is rooted in environmental, economic and cultural sustainability.
Together with this, CIB believes in a “customer-first, market-oriented” strategy, which draws on the bank’s full capabilities across its banking and investment businesses. In recent years, for instance, CIB has sought to integrate and leverage its investment banking and asset management capabilities across its private banking platform, enhancing its research and investment advising expertise.
Overall, this approach has been consistently applied since the private banking business was first launched in Shanghai in 2011. A decade later, it is still being executed successfully, helping the bank attract 58,262 private banking customers last year – up 20% on the beginning of the 2021. In addition, the bank had a total of Rmb742.4 billion of financial assets under management for private banking customers, an increase of 17% from the start of the year. Importantly, CIB has maintained steady customer growth over the past decade, achieving a 32% compound annual growth rate in the number of customers, and CAGR of 31% in financial asset under management during this period.
Such a strong financial performance over the past decade and last year specifically is notable. Indeed, 2021 was a stellar year for CIB which won approval from the China Banking and Insurance Regulatory Commission (CBIRC) to commence operations as a dedicated private banking institution, making it the first licensed private bank among joint-stock banks in the country over the past decade.
Family office solutions
CIB is constantly evolving its family office business to meet the ever-changing wealth inheritance demands of its HNW customers.
For instance, CIB launched its family wealth management brand, Legacy, in 2019, to provide a one-stop, comprehensive consulting service to entrepreneurs, their families and businesses.
More recently, the bank launched CIB Selected, which is an innovative product screening and assessment platform designed to analyse the asset allocation needs of private banking customers. Last December, the bank launched version 2.0 of the platform, which provides investment solutions with diversified, integrated and customised strategies that are based on benchmark client profiles.
In addition to this, CIB last year issued Xingcheng Hengxiang – a series of wealth management products tailored exclusively for private banking HNW customers – and also launched Xingqihui, a comprehensive service plan for business owners to meet their need for packaged financial services covering individuals, businesses and families.
Such has been the success of these offerings, the number of family trusts and discretionary trusts with CIB increased by 667 over the course of last year, with nearly Rmb10 billion in new and additional capital under trust.
Driving digital progress
Digital innovation in products and services has been an important pillar in CIB’s private banking strategy. There are several areas where the bank has focused investment, including: digitally empowering customer relationships; implementing financial technology in wealth planning and portfolio management; developing intelligent asset allocation and establishing product research support across all coverage areas; providing technology-enabled investment research services; and introducing platform and scenario-based digital wealth planning.
As part of this focus, CIB has also developed its own private banking business management system to empower all aspects of private banking, customer relationship management, data analysis and investment decision making. The system standardises and systemises the four-step sales process of risk assessment, asset allocation, product selection and portfolio tracking for wealth managers.
In addition, and in line with the rising need to develop and launch banking apps, CIB’s private banking app offers customers everything from an online medical consultation to exclusive strategy information, real-time asset reviews, and advice on product purchases.
As of December 2021, the private banking app has 56,300 monthly active users.