Sung-Yeop Kim, executive vice president and head of the Wealth Management Group and Private Banking for KEB Hana, talks with Global Finance about how his bank serves Asia’s growing ranks of wealthy.
Global Finance: Your private bank continues to expand rapidly despite slowing growth in the South Korean economy. How do you do it?
Sung-Yeop Kim: The number of high-net-worth individuals (HNWI) in Korea has been increasing continuously, reaching almost 193,000 with assets of $530 billion in 2016, according to Capgemini’s research. The private banking and wealth management market is dominated by domestic firms that offer strong Korean language skills and a deep understanding of the local market.
GF: Private banking is a new concept for many of the emerging rich in Asia. How do you convince clients they need a private bank?
SYK: As the society continues to age rapidly, early retirement and low interest rates are major concerns for rich individuals. High-net-worth clients also have ever-increasing tax concerns, and a need for investment products with tax-shield effects—for example, REITs and real estate funds that we can offer. Another important need is estate and wealth transfers.
GF: How do you manage digital innovation in wealth management?
SYK: We first moved into robo-advisor service in 2013 with our HEAD (Hana Early Analysis and Diagnostic) system. In 2015, we rolled out Cyber PB, a robo-advisor prototype. In July 2017 we launched its advanced version, HAI Robo. This system combines 10 years of market and fund data with a deep-learning algorithm. After evaluating a client’s risk-return profile, HAI Robo recommends model portfolios, and can enroll the client in funds in real time. When we deal with technology, we emphasize a hybrid model that allows the client both digital tools and as much human advice as necessary.
GF: How do you reach out to the millennial generation in South Korea?
SYK: In order to reinforce client relationships, targeting the next generation is essential. We offer various life-care services aimed at family members of our HNW clients. In 2016, we offered an English Summer Party for HNWIs’ third generation, grandsons and granddaughters, as well as a matchmaking event for the second generation. Through efforts like this, we gained 3,214 private clients in 2016, accounting for 73.9% of our AUM increase.
GF: What are the top priorities for management of your private bank over the next year or two?
SYK: We are extending our private banking capabilities simultaneously for ultrahigh-net-worth individuals and the “mass affluent.” Early in 2017, we launched a premium Club1 brand to support clients holding more than $3 million. The Club1 private-banking center, located in Seoul’s Gangnam district, is inspired by the “slow banking” concept. That means the more hours UHNWIs are spending on non-financial activities there, the more financial transactions are likely to be generated. So the center includes a “super car” parking lot, private library, luxury audio room, art gallery, rooftop bar, and so on.
On the other hand, we are supporting affluent clients starting at $300,000 with 1,608 VIP Advisors across our retail branches. These advisors meet the growing demand for wealth management in neighborhood branches and small to medium-size Korean cities.