Delivering Wealth Management at Scale and with Customisation across India’s Vast Wealth Management Landscape

As the Indian wealth markets expands and evolves across every segment from retail customers to UHNW clients, it is vitally important for the competitors in this dynamic environment to transform their platform and proposition with smart investments and digital strategies to create a lasting impact. The second panel discussion of the Hubbis India Wealth Management Forum in Mumbai on August 31 saw a panel of experts we selected from leading banks and wealth firms offer their insights into the issues as raised by the panel chair, Yash Shah, Partner at Synpulse. One of the speakers was Virendra Somwanshi, Head - Wealth Management & Capital Markets at Bank of Baroda.

The discussion first centred on the evolution of the wealth management proposition in India, with the Chair wondering if there remains a general reluctance in India for customers to pay for advice rather than just for products. Somwanshi replied that it is all about the delivery and recognition of value, as well as about the regulatory environment, which now better delineates between advisory and distribution.

“Behavioural change is coming and in a major way,” he reported. “If there is value demonstrated and communicated, then there is a portion of customers who are more than happy to pay for the advice, through intermediaries who are licenced to advice; the quality of that advice is what makes the differentiation these days, because products are increasingly commoditised. ”

Plenty of experience

Somwanshi himself has a long and successful career and is ideally placed to opine on these matters given his historical perspective on India’s financial sector development. He has more than 25 years of experience in retail banking and private wealth management and has served both multinational and Indian corporates in various leadership roles and also in the capacity as a board member. He spent over 17 years at Citi, in multiple businesses across consumer banking, wealth management, securities and investments management in both India and Singapore. Before joining the Bank of Baroda franchise in 2021, he was the MD & CEO of Motilal Oswal Private Wealth Management.

Armed with this background, it is little wonder that he is considered a thought leader in the domestic wealth management industry and represents the industry in various forums.

A giant among Indian banks

Somwanshi explained that Bank of Baroda is a major institution in India, with roughly 170 million customers of different sizes with distribution across 8000 plus branches, and more than 70,000 employees.

“As you might imagine, segmentation is key because that is the starting point, as customer requirements across segments are significantly diverse,” he said. “We look at the mass affluent segment and the HNW market and evaluate what we can do at scale. We have to look at the geographical segmentation across India as well, and we see that traditionally, our largest cities are extremely well served with hyper-competition across wealth managers, with the best talent and service available, but when you go to the tier 2 and tier 3 cities, you also need to be able to deliver to those clients, build trust, and to do so you need both people and technology.”

Reaching out across India

Accordingly, he explained that the bank for the past roughly five years has worked in the top 30 cities across India, where they can staff with the right talent, but beyond those 30 cities, there is still another approximate 55% of the Indian HNWI base to be served. “To service those clients, we saw the need to create a centralised technology-enabled digital hub and then service these 1.5 lac clients who are spread across these tier 2 and tier 3 cities,” he said.

And the results have been positive. “It has been an amazing revelation that people in those cities are very happy to listen to a remote discussion or video discussion, which pre-pandemic was not possible.”

Women enter the investor ranks

He also pointed to the need to service India’s expanding ranks of women entrepreneurs, noting that the percentage of such successful women investing in equities in the last two years had surged from 16% to 24% today. “Women are increasingly excelling in their careers, taking higher ownership of their finances, and their financial future,” he observed.

And so do Gen Zs too

Additionally, he reported that GenZ investors are joining the ranks of India’s financial investors in force, playing an increasingly prominent role in the mutual fund market alongside millennials.

“We might think that the GenZ investors are only using the technology and discount platforms, but actually many of them are actually starting their journey through new-age Digital platforms. In short, there is immense potential for the Digitally enabled wealth management proposition across the Indian geography, across gender, and especially across the younger generations.”

Scale + customisation = success

He added that with the right strategies and technologies, they can deliver a wealth management proposition at scale that is also customised. “In today’s world, people expect a seamless Amazon or Netflix type service, they want access and delivery at the click of a button, so we must build a democratised platform, but with analytics also build segment differentiation and personalisation. In that way, we can focus our offering and provide more specialised advice across the different segments and sub-segments we identify.”

Somwanshi also explained that they are in the midst of launching their private banking channel to service the needs of their UHNW banking clients, many of whom have very significant lending relationships with the bank. He reported that had completed a soft launch of their private banking channel, designed to cater to HNWIs and UHNWs with USD2 million and above relationship value. “We recognise there is a lot of competition in these areas, but we are pleased with the outcomes so far,” he reported. “These pies are poised for significant growth , and hence by catering to this segment, we are positioning ourselves for the future.”

Simplicity and adoption

Somwanshi explained that their priorities in the next few years centre on simplicity and adoption. “The world has become extremely complex, and the wealth management industry has evolved in terms of products which are equally complex, but customers want simplicity of product, simplicity of delivery, simplicity of processes, simplicity of onboarding and simplicity of learning curve.”

He said that in these missions, technology is the biggest enabler, but what is even more important is the adoption of technology. “We can create a Taj Mahal, but we also have to get people to move into it and see it,” he commented. “You can create an architecture, but without adoption, you do not achieve the economies of scale and the requisite efficiency. Accordingly, a key emphasis for us is for our people to ensure they leverage our digital transformation and investments, and deliver that technology internally and more importantly, to our customers.”

Getting Involved

Interested in being part of the discussion? Be sure to save the date of our India Wealth Management Forum 2024, which is taking place on Wednesday August 28th, 2024.

Want to find out more about how you can take part? Get in touch at [email protected].