Joseph Poon, group head, DBS Private Bank shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, business performance, investments, regulations, and technology.
Industry Trends | In what ways has the COVID-19 pandemic irrevocably changed the private banking industry and your own bank’s approach to operations and service?
COVID-19 has been an unprecedented jolt to our industry. However, our established digital platform allowed us to nimbly move client interactions online when COVID-19 emerged. In fact, the ease of using our virtual channels helped to increase, enhance and enrich our client conversations. Our digital platform was an added enabler in giving clients uninterrupted access to our insights, advice and support throughout a period of great market uncertainty in 2Q20.
DBS iWealth, our digital banking and wealth management platform where over 80% of our wealth clients are registered users, allowed them to monitor and manage their portfolios from the comfort, convenience and safety of their homes at all times. With the pandemic’s long shadow continuing to loom over us for some time to come, our digital capabilities will continue to play an important role in ensuring our clients have access to our advice, and tools to monitor and manage their investments in what is likely to remain choppy markets in the months ahead.
Industry Trends | Few can deny the importance of Asia’s onshore wealth markets — in terms of asset pools and the need for wealth management from increasingly sophisticated domestic investors. What opportunities do these markets bring to your business, and to what extent will ‘onshoring’ shape your strategic agenda?
Asia remains the outstanding region for wealth creation and management. ASEAN in particular is starting to shine, due to factors such as the reshoring of supply chains to certain markets in the region, and rising affluence driving domestic consumption.
Since last September, we have been collaborating with our onshore business in Thailand to provide Thai HNWIs access to our private banking offering in Singapore. Beyond access to global investment opportunities, this allows them a means to diversify their existing investment portfolio. It’s still early days, but response has been positive and we are on track to meet our growth target of doubling our wealth AUM in Thailand from SG$4 billion to SG$8 billion by 2023.
The other exciting market for us is the Philippines. We kicked off some discussions in 2019 and are still in the midst of structuring the best way to tap on the growing onshore HNWIs’ increasing investment appetite, and giving them access to our established wealth management platform in Singapore.
More clients are looking to Singapore as a lighthouse from which to assess and invest in regional opportunities. DBS, as Singapore’s leading bank with a strong Asian footprint, network and expertise, stands well placed to advise, support and partner them on this journey.
Business Performance | NNA gathering and account opening have proven challenging in a pandemic-affected world. If we continue to experience lockdowns and travel restrictions in 2021, how can private banking businesses adapt?
Our private banking business saw solid growth in spite of the pandemic, and stands on track to ending 2020 on a strong note. This is testament to the trust our clients have in us through both good times and bad, and the resilience of our Chief Investment Office’s advice – in particular the Barbell investment strategy, which is outperforming its benchmark by 5% with +17% YTD return.
While challenges (e.g. travel restrictions) hindered our usual way of working, we quickly responded with innovative work-arounds. Examples include setting up “virtual meeting rooms” that, in combination with “docusign workflow”, enabled critical wealth planning discussions to take place. Our already established multi-year digital transformation journey also gave us a head start in quickly and seamlessly moving our client engagements online. Our clients’ digital consumption of our investment research and insights – which had already been availed to them for some time – ballooned from March.
The pandemic also highlighted the importance of agility. We were quick to navigate rapidly-changing market conditions, and enabled clients to take advantage of relevant and timely investments, including structured notes that capture non-market-directional opportunities and derivatives to participate in volatile markets. Confident in ESG investments’ risk-mitigation and long-term outperformance potential, we also expanded our ESG offerings and relaunched our trademark ESG Outperformance structured products.
Investments | What key investment themes shape your bank’s 2021 outlook — and why?
2021 is going to be a year of recovery. Positive developments on the vaccine front have triggered a rotation to “value” plays in global equities; geared towards beneficiaries, including travel related industries, banks, and energy corporations. Importantly, the recent switch to “value” signals a broadening of the market rally, underlining its sustainability.
We continue to advocate staying invested with a Barbell Strategy, holding overweight exposures in growth equities on one end, and income assets on the other. On the growth side of the portfolio, we advocate investing into I.D.E.A. companies – the Innovators, Disruptors, Enablers, and Adapters. These companies will thrive in a world that is fast transforming into a digital economy.
Additionally, we recommend exposure to “Vaccine Winners”, referring to companies that had been hit hard by the pandemic, but are now poised for rebound as vaccination for COVID-19 may soon become a reality. On the income side of the barbell, we suggest clients stay with BB/BBB-rated bonds and dividend-yielding stocks, including Singapore REITs.
Investments | What important steps did your bank take to drive the sustainable investing agenda and to increase access to sustainable investing opportunities in 2020?
We continue to focus on client education and empowerment. Clients are regularly engaged through events such as our quarterly Windows of Philanthropy sessions, which cover topics such as venture philanthropy and ESG. We are ramping up ESG in our ongoing conversations with clients to boost their understanding of how they can play a positive part via their investments. We work closely with DBS Foundation, which is dedicated to championing social entrepreneurship in Asia, to identify opportunities for clients to give back to society and support social enterprises in scaling their impact.
We have integrated MSCI ESG Ratings into our wealth product suite. This provides clients with an “ESG” view of their investments, and empowers them to make more informed decisions.
We have relaunched our ESG Outperformance structured product following the success from the first tranche, which was launched in 2018 and boasts a ROI of over 70% YTD.
Staff training has been a key enabler for us as well. We stepped up the training of our RMs, and provide them with enhanced resources and tools to support clients in their sustainable investment journeys. We launched a series of ESG masterclass webinars for all front office staff in 2020, complemented with virtual classroom-style trainings to entrench their knowledge on how sustainable investments play a part in our clients’ wealth building journeys.
Meet 2020’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2020.
