Thursday, 25 April 2024

Minsheng bank uses robust risk management to raise customer confidence

5 min read

By Foo Boon Ping

Huang Jin, general manager of wealth management and private banking at China Minsheng Bank, discussed the bank’s private banking strategies that emphasise strict risk management, long-term client relationships, and innovative non-financial services

Huang Jin, general manager of wealth management and private banking at China Minsheng Bank (CMBC) offered insights into the bank’s private banking strategies and features.

Amidst increasing market volatility and risks in trusts and real estate, the wealth management industry in China has seen significant changes. Private banking, in particular, has seen a rise in market share among the top 12 private banks from 70% in 2019 to 90% in 2023. This growth is driven by factors such as brand reputation, resources, and channel advantages.  

Huang highlighted that CMBC has earned its reputation in the industry through rigorous risk management, long-term relationships with private business owners, a robust value-added service system, and private banking consulting solutions, resulting in 7% year-on-year (YoY) growth in assets under management and 9.5% YoY growth in client scale in 2023.

In a market where financial product offerings tend to homogenise, Huang explained, the bank recognised the importance of non-financial aspects in improving customer recognition and experience. The bank introduced its Extraordinary Benefits VIP service system in 2021, catering to high-end debit card and credit card customers, corporate clients, and senior executives of small businesses. This system offers a range of non-financial services in sports, healthcare, travel and lifestyle. Additionally, it provides high-net-worth (HNW) customers with secretarial services, a highly competitive perk in the market. The bank’s approach earned it the Private Banking Value-added Service Award in The Asian Banker’s 2023 Wealth&Society programme.

According to Huang, CMBC’s success also stems from its comprehensive product curation and risk control measures. In a climate where customers tend to be risk averse, CMBC’s efforts in product curation and risk management align with customer expectations and enhance satisfaction. 

The bank exited the real estate and trust businesses three to five years ago, eliminating associated risks. CMBC’s product shelf has nine major categories focusing on public-traded funds and standardised wealth management products while excluding riskier areas like private equity and self-operated bonds. The bank introduced quantitative investment strategies and established a professional fund-of-funds team through brokerage firms to further minimise risk. As a result, Huang said, CMBC has reduced post-sales risks, leading to a significant decrease in customer complaints from 1,000 in 2022 to just two to three in 2023.

He added that the bank goes beyond financial and non-financial services by providing professional and personalised consultation services to address the challenges faced by HNW clients. These services focus on problem-solving, customisation, and service and consultancy advisories.

Keywords: Wealth Management, Private Banking, Market Volatility, Trusts, Real Estate, Brand Reputation, Asset Under Management (aum), Value-added Services, High-net-worth (hnw) Clients, Risk Management, Product Curation, Non-financial Services, Professional Consultation Services
Institution: China Minsheng Bank (CMBC)
Country: China
Region: Asia
People: Huang Jin
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