Vietnam Prosperity Bank's staff offer clients consultation. — Photo vietnamplus.vn
Over the past decade, Việt Nam has seen a remarkable surge in personal financial assets (PFA) that outpaces many other Asian countries. This robust economic environment has created a significant demand for specialised wealth management services, tailored to the diverse financial aspirations of retail customers.
A recent projection by McKinsey & Company has indicated that by 2027, Việt Nam's PFA market will reach approximately US$600 billion, growing annually at a rate of 11 per cent from its 2022 baseline of around $360 billion. This growth encompasses a significant increase in managed wealth assets within the industry, presenting an estimated additional $65 billion to $75 billion in opportunities for institutions. These opportunities are poised for equal distribution across both affluent and high-net-worth individual (HNWI) segments, making it a tantalising prospect for wealth management providers.
In recent years, the financial markets in Việt Nam have evolved substantially, driven by more liberalised financial market regulations and the increasing demand for wealth management solutions. Vietnamese regulators have been proactive in recognising the growing appetite for investment opportunities and have taken measures to facilitate easier access to investment solutions.
This trend is expected to gain further momentum as the Vietnamese government rolls out its financial development plans through 2030, with a particular emphasis on financial market regulation and the expansion of the debt market which aims to account for approximately 65 per cent of the GDP.
To harness the full potential of Việt Nam's wealth management market, institutions are gearing up to navigate the opportunities that lie ahead. They are strategically positioning themselves to serve a diverse clientele spanning mass-market, affluent, and HNWI segments. The market landscape now features four primary archetypes of firms: local commercial banks, global or regional banks with a local presence, independent portfolio management companies, and insurers. Additionally, wealth-focused fintech companies are beginning to disrupt the industry.
According to McKinsey’s research, despite the tremendous potential, Việt Nam's wealth management sector faces certain challenges. Customers often grapple with mistrust in financial institutions, fueled by concerns over self-serving agendas and hidden charges. They yearn for tailored solutions that align with their unique financial goals, rather than off-the-shelf offerings. Relationship managers are perceived as lacking the skills and market knowledge to understand customer requirements fully.
Furthermore, institutions predominantly focus on physical customer engagement, despite the growing preference for digital or hybrid models among customers.
Within financial institutions, regulatory restrictions pose challenges as they seek to directly distribute investment solutions. Talent gaps in the industry hinder customer acquisition and engagement, while outdated digital infrastructure hampers the effectiveness of relationship managers.
To seize the wealth management opportunity in Việt Nam, financial institutions are suggested to adopt specific operating models tailored to affluent and HNWI customers. Key steps include data-driven customer segmentation, offering bespoke products and solutions, defining clear customer acquisition channels, revamping service models, establishing rigorous advisory frameworks, providing digital tools, addressing talent gaps, and fostering strategic partnerships.
Meanwhile, to capture the affluent customer market, financial institutions should focus on specific details. Affluent customers prefer straightforward, practical banking, credit and wealth solutions rather than custom-made ones. They seek high-value credit cards, special pricing on certain financial products, global money transfers, and essential business banking services like payment processing. For investments, they want simple solutions that help them achieve life goals like owning a car, improving their homes, saving for their children's education, or planning for retirement. To win over these customers, banks should use data-driven strategies, build a digital-hybrid service model mixing remote and digital channels, and offer portfolio-based advisory services guided by the Chief Investment Officer (CIO). — VNS