A transformation is occurring in the private banking landscape. Key players in this reconfiguration include Singapore, Dubai, Hong Kong, and the US.
Technological advances, client preferences, legislation, and geopolitical forces are bring a significant change in private banking. Singapore, Switzerland, Dubai, Hong Kong, the UK, and the US have effectively repositioned themselves to attract affluent clients.
Several elements determine a city’s private banking appeal. Strong GDP per capita and growth attract private wealth and foster investment. This requires a strong financial and legal infrastructure that offers service options and stability for peace of mind. Finally, the city’s population size, high density of wealthy people, and expanding need for wealth management services solidify its status as a private banking powerhouse.
Given these characteristics, Switzerland’s longstanding reputation for private banking still leads many global rankings. Deloitte’s recent International Wealth Management Centre Ranking ranks the country first in competitiveness and asset growth by absolute International Market Volume.
Looking at the latter number alone, the UK and US follow closely, attracting institutional investors and HNWIs to their major booking hubs. However, booming growth, targeted policy intervention, quick innovation, and seamless intraregional connection are heating up competition in the East, challenging Western hot spots. The powerful financial centers of Singapore, Hong Kong, and Dubai are essential to global wealth management.
Hong Kong is readjusting its position as a leader in Asia Pacific private banking. Hong Kong’s political and regulatory uncertainty contrasts with Singapore’s stability and predictable rule of law, propelling wealthy Asian families to reassess their options.
Singapore and Hong Kong have traditionally had a healthy competition, but industry professionals and clients are increasingly seeing the long-term benefits of being in the ‘Lion City.’ Singapore outranked Hong Kong in Deloitte’s competitiveness report due to its increasingly friendly tax system for family offices and HNWIs. To enhance domestic wealth management, the Monetary Authority of Singapore (MAS) altered single-family office tax benefits in July.
Hong Kong remains an attractive private banking destination, but geographic diversification is becoming more crucial when determining asset placement domiciles. Singapore rivals Switzerland because of its taxation policy, technical advancement, regulatory excellence, and broad clientele.
Singapore’s global appeal is noted. Single-family offices in Singapore have more than doubled in two years, from 400 in 2020 to 1,100 in 2022, as more HNWIs settle there. Additionally, Indian billionaire Mukesh Ambani, hedge fund magnate Ray Dalio, and Google Co-Founder Sergey Brin have chosen Singapore for their family offices, making the market more attractive.
The 2023 KPMG Global Family Office Compensation Benchmark Report found that 9% of family offices worldwide are in Asia, including 59% in Singapore, an excellent feat. Private banking and wealth management organizations have aggressively expanded their in-market capabilities to suit the growing demand for sophisticated family office services. Some firms have succeeded in the current environment. At the end of 2022, Singapore-based multi-family office Farro Capital raised over US$1 billion in AUM in four months.
“Wealthy families have become more discerning and sophisticated when managing their wealth,” said Farro Capital Co-founder and CEO Hemant Tucker. We designed our comprehensive platform to meet our clients’ worldwide objectives and regionally diversified assets, which demands seamlessly connecting existing and developing wealth hubs.
Global interconnection and wealth mobility will become increasingly important in the future. It is becoming clear that asset placement is as important as allocation for wealth growth and protection. In an increasingly multipolar world, being able to choose where to live has strategic and lifestyle benefits.
More families are diversifying to protect their legacies from instability. Alternative residency or citizenship is a growing asset class in holistic family portfolios. Planning ahead gives people unique access to the world’s most powerful wealth hubs’ bridges. The good news is that families now have more options, including investment-driven residence programs like the UAE’s Golden Visa, Singapore’s GIP, and the US EB-5 VISA.
UHNWIs, those with net worths over US$50 million, are expected to reach 372,000 by 2027. Eastern wealth hubs in Asia Pacific and the Middle East will certainly attract many instead of Westerners. The same study predicted that Asia Pacific would produce 33% or 123,000 UHNWIs. This wealth is tremendous, but it will migrate forward in quest of the greatest home, often multiple ones.
Conclusion
Technological advances, client preferences, regulatory changes, and geopolitical forces are transforming private banking. Economic growth and rising disposable incomes will drive 33% of new Universal Humanitarian Wealth Institutions (UHNWIs) in Asia Pacific by 2027. As UHNWIs become more savvy investors, wealth management services need grows. New technologies and platforms are improving customer service, risk management, and operational efficiency in private banking.
UHNWIs want individualized, digital private bank experiences. The rise of Asia-Pacific wealth hubs like Singapore, Hong Kong, and Dubai, family offices, technology, and ESG investing are important trends to follow. Private banks that adapt to these changes and suit UHNWI requirements will succeed.
