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2020 Foresight: Banking the Mass Affluent ©WealtInsight | This report is a licensed product and is not to be photocopied.
Publication date: January 2014
Report code: WI0009FR
www.wealthinsight.com
2020 Foresight: Banking the
Mass Affluent
Beijing • Buenos Aires • Frankfurt • Hong Kong • Hyderabad • London • Madrid • Mexico City • New York • San Francisco • Seoul • Shanghai • Singapore • Sydney
2020 Foresight: Banking the Mass Affluent ©WealtInsight | This report is a licensed product and is not to be photocopied.
About WealtInsight
The WealthInsight Intelligence Center Database is an unparalleled resource, and the leading
database of its kind. Compiled and curate by a team of expert research specialists, the database
comprises dossiers on over 60,000 HNWIs from around the world.
The Intelligence Center also includes tracking of wealth and liquidity events as they happen, and
detailed profiles of major private banks, wealth managers and family offices in each market.
With the Database as the foundation for its research and analysis, WealthInsights able to obtain an
unsurpassed level of granularity, insight and authority on the HNWI and wealth management universe
in each of the countries and regions it covers.
Contact:
Ouliana Vlasova
Head of Content, WealthInsight
+44 (0)20 7406 6711
2020 Foresight: Banking the Mass Affluent ©WealtInsight | This report is a licensed product and is not to be photocopied.
TABLE OF CONTENTS
LIST OF TABLES ...................................................................................................... 2
LIST OF FIGURES..................................................................................................... 0
1 Introduction ........................................................................................................ 1
1.1 What is this report about? ....................................................................................................... 1
1.2 Mass Affluent – Definition and Scope ..................................................................................... 2
Executive Summary ................................................................................................. 1
2 Global Snapshot ................................................................................................ 3
2.1 Overview ................................................................................................................................. 3
2.2 Market Size and Forecast by Region ...................................................................................... 5
2.2.1 Americas ......................................................................................................................... 5
2.2.2 Europe ............................................................................................................................. 6
2.2.3 Asia-Pacific ...................................................................................................................... 8
2.2.4 Middle East and Africa .................................................................................................. 10
3 The Mass Affluent – Customer Attitude and Behavioral Analysis .............. 12
3.1 Wealth Management Analysis............................................................................................... 12
3.2 Spending Behavior ................................................................................................................ 14
3.3 Spending Behavior Towards Banking Products .................................................................... 18
3.4 Demographic Analysis .......................................................................................................... 19
3.5 Emerging Trends – Needs and Priorities .............................................................................. 20
4 Mass Affluent – Key Drivers, Restraints and Opportunities ........................ 22
4.1 Drivers ................................................................................................................................... 22
4.2 Restraints .............................................................................................................................. 24
4.3 Opportunities ......................................................................................................................... 26
5 Bank’s Strategies to Target Mass Affluent .................................................... 29
5.1 The Americas ........................................................................................................................ 31
5.1.1 Marketing and social media strategy............................................................................. 31
5.1.2 Targeting Strategy ......................................................................................................... 34
5.1.3 Case Study Bank of America ........................................................................................ 36
5.2 Europe ................................................................................................................................... 37
5.2.1 Marketing and social media strategy............................................................................. 37
5.2.2 Targeting strategy ......................................................................................................... 38
5.2.3 Case Study Lloyds Banking Group ............................................................................... 39
5.3 Asia-Pacific ............................................................................................................................ 40
5.3.1 Marketing and Social media strategy ............................................................................ 40
5.3.2 Targeting Strategy ......................................................................................................... 41
5.3.3 Case Study Standard Chartered ................................................................................... 43
2020 Foresight: Banking the Mass Affluent ©WealtInsight | This report is a licensed product and is not to be photocopied.
5.4 The Middle Eastand Africa .................................................................................................... 44
5.4.1 Marketing and social media strategy............................................................................. 44
5.4.2 Targeting strategy ......................................................................................................... 44
5.4.3 Case Study Al Rajhi bank ............................................................................................. 45
6 About WealthInsight ........................................................................................ 46
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LIST OF TABLES
Table 1: Mass Affluent Population in the Americas, (Million), 2008–2017 ............................................................... 5 Table 2: Mass Affluent Populations in Europe, (Million), 2008–2017 ...................................................................... 7 Table 3: Mass Affluent Population in Asia-Pacific, (Million), 2008–2017 ................................................................. 8 Table 4: Mass Affluent Populations in the Middle East and Africa, (Million), 2008–2017 ...................................... 10
2020 Foresight: Banking the Mass Affluent ©WealtInsight | This report is a licensed product and is not to be photocopied.
LIST OF FIGURES
Figure 1: Mass Affluent Population Shares by Region, (%), 2012........................................................................... 3 Figure 2: Wealth Distribution by Population Category, 2012 (%) ............................................................................ 4 Figure 3: Mass Affluent Populations in the Americas, (Million), 2008–2017 ............................................................ 6 Figure 4: Mass Affluent Populations in Europe, (Million), 2008–2017 ..................................................................... 7 Figure 5: Mass Affluent Population in Asia-Pacific, (Million), 2008–2017 ................................................................ 9 Figure 6: Mass Affluent Populationsin the Middle East and Africa, (Million), 2008–2017 ...................................... 11 Figure 7: Investable Assets Distribution of the Mass Affluent ............................................................................... 12 Figure 8: Mass Affluent Spending Categories ....................................................................................................... 14 Figure 9: Mass Affluent Spending Shares ............................................................................................................. 15 Figure 10: Share of Mass Affluent on Banking Products Spending ....................................................................... 18 Figure 11: Mass Affluent Customers Priority for Financial Products ..................................................................... 20 Figure 12: Banking the Mass Affluent – Drivers and Their Impact ........................................................................ 22 Figure 13: Banking The Mass Affluent – Restraints and their Impact.................................................................... 24 Figure 14: Banking The Mass Affluent – Opportunities and their Impact .............................................................. 26 Figure 15: Market Segmentation and Scope of Business ..................................................................................... 29
INTRODUCTION
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1 Introduction
1.1 What is this report about?
Providing wealth management services has become a strategic priority for retail banks, wealth
management firms and their rivals. Not only have economic forces driven banks to prioritize this
business, but the deterioration of other profit sources and the need to raise deposits have meant that
providing wealth management services to affluent clients is a key business.
Within the generic category of ‘wealth management’, the mass affluent segment is one of the most ill-
defined and difficult to manage – yet it is essential in the bank’s wealth management strategy. For
retail banks and wealth management firms, today’s mass affluent customer is tomorrow’s most
profitable and lucrative high net worth (HNW) client. Increasingly, the affluent client is becoming a
more significant contributor to the profit of successful practitioners.
This report focuses on the mass affluent customer segment and charts the spending behavior of the
mass affluent with an emphasis on the banking sector. Various marketing, advertising and targeting
strategies are included, and are supported with examples and case studies.
The report includes market data and forecast for the mass affluent population from WealthInsight’s
proprietary wealth model. The review period is defined as 2008–2012, while the forecast period is
2013–2017.
The scope of the report covers four regions: America, Europe, Asia-Pacific, and the Middle East and
Africa. In the Americas, the countries covered are Argentina, Brazil, Canada, Chile, Mexico, and the
US. For Europe, the countries covered are Belgium, France, Germany, the Netherlands, Russia,
Spain, Switzerland, and the UK. In Asia-Pacific, the countries covered are Australia, China, Hong
Kong, India, Japan, Malaysia, Singapore and South Korea. In The Middle East and Africa, the
countries covered are Egypt, Saudi Arabia, South Africa, and the United Arab Emirates (UAE).
INTRODUCTION
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1.2 Mass Affluent – Definition and Scope
Defining the mass affluent segment is itself a challenge. There is a reasonable agreement among
practitioners that the key metric is the amount of the client’s investable or disposable wealth that is
potentially held in, or managed by, a financial institution. Such segmentation usually places this client
somewhere in the wealth pyramid between the mass market and HNW categories. A typical definition
places the mass affluent client in the segment between the local-currency equivalent of US$100,000
and US$1 million of investable wealth. For example, in the US, liquid assets at US$100,000 and
above are considered mass affluent, whereas, in Asian regions, the threshold value for the mass
affluent is lower due to the average incomes of populations and other factors such as government
regulations, view point on economic matters and amount of liquid asset available to an individual. In
practice, for most banks this is only a rough guide– perhaps inevitably so in a complex world where
behavior and other variables are often more relevant.
The term high net worth individuals (HNWIs) refers to individuals with wealth of US$1 million or more,
including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary
residence), alternative assets and business interests.
The ultra-high net worth individuals (UHNWIs) wealth group comprises the billionaire, cent millionaire
and affluent millionaire groups. It represents those individuals with wealth of US$30 million or more,
including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary
residence), alternative assets and business interests.
Investable assets include all assets except business interests, whereas ‘liquid assets’ are defined as
all assets that can be cashed in immediately.
Wealth management is defined as the provision of banking services to wealthy individuals and their
families. It generally involves the management of trusts and inheritance, and the allocation of client
funds.
A private bank is defined as a division of a banking group that provides wealth management services.
EXECUTIVE SUMMARY
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Executive Summary
The US has the largest mass affluent population; Asia-Pacific is the fastest-growing region
The mass affluent population is rapidly growing and accounted for a X.XX% share of the world’s
population in 2012.Although it is a relatively small segment in volume terms, it holds around 40% of
the total world’s wealth. In volume terms, the US is the leading country with a mass affluent
population of XX.X million. In regional terms, Europe has the largest mass affluent population while
the Asia-Pacific is the fastest-growing.
The mass affluent population is an entirely separate group of customers who are demographically and
economically different from HNWIs and the mass market. Their lifestyle, spending behavior and
attitudes are unlike those of the rest of the population. To tap into this opportunity, banks and wealth
management companies need to offer specialized products and services to fulfill the requirements of
this highly profitable and underserved customer segment.
Due to prevailing economic uncertainty, managing the assets and wealth with highest-profit return is
vital for prosperity. HNWIs possess the largest amount of wealth and have been adequately served by
banks. However, in wealth terms, there is another category between HNWIs and the mass market,
termed the mass affluent. This category possesses a significant amount of wealth that needs to be
managed properly.
Mass affluent customers are different; retirement plans are their top priority
The mass affluent category has a different approach to money management, and displays a
preference for spending and investments. The mass affluent have different life styles and tend to
spend more on entertainment, luxury and leisure products and services. Demographically, most of the
mass affluent population is reaching retirement age and were victims of the financial crisis of 2008.
The category has a tendency to save for retirement and their children’s education.
Conservativeness still persists within the mass affluent population
The adverse effects of the financial crisis in 2008 had a large-scale impact on the mass affluent
population. It particularly affected spending and investment behavior, and made them more
conservative and risk averse. There was a tendency to grow money by investing in financial products
with limited risk to provide safer returns. Banks and wealth management companies are endeavoring
to provide the category with products such as these.
EXECUTIVE SUMMARY
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Financial advice
As the mass affluent have a somewhat conservative and risk-averse approach to their money, sound
financial advice is required. Every mass affluent individual has a different approach to spending and
investments. This provides an ample opportunity for wealth management firms to target the mass
affluent population with tailored financial advisory services.
Online banking has very high acceptance rate among the mass affluent and emerging affluent
The emerging affluent are young, mobile and technologically literate. To cater to the emerging affluent
population with easily accessible banking products, integrated and online banking facilities are
integral. Online banking is highly accepted and adopted by the young affluent. The older mass
affluent population has also started to adopt more high-performance and convenient ways of banking.
ABOUT WEALTHINSIGHT
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2 About WealthInsight
WealthInsight provides detailed data and insightful analysis on the world’s HNWI and wealth
sector. With decades of experience providing business information, WealthInsight helps
organizations to make informed decisions and win new business.
At WealthInsight’s core is its proprietary HNWI Database of the world’s wealthiest individuals.
Around this database WealthInsight has built a number of valuable research-based products
and services that make WealthInsight much more than just a rich contact list.
WealthInsight works with and provides solutions for:
Wealth managers
Private banks
Family offices
Technology providers
Professional services – consultants, accountants, lawyers and real estate
professionals
Fund managers, hedge fund managers, asset managers, venture capitalists
Non-profit and educational institutions
WealthInsight’s corporate headquarters are located in London, with offices in New York, San
Francisco, Sydney, Seoul and Hong Kong.
For more information on WealthInsight please visit www.wealthinsight.com
Reports
WealthInsight publishes high-quality research reports focused on the wealth sector. The reports
provide comprehensive analysis of countries, regions and special topics.
With the HNWI Database as the foundation for its primary research and analysis, WealthInsight
is able to obtain an unsurpassed level of granularity, insight and authority on the HNWI
universe in each of the countries and regions covered.
All reports are available as a part of the WealthInsight Intelligence Centre. Reports can also be
purchased on a subscription or one-off basis.
Every WealthInsight report is uniquely formulated for the region, country or topic covered. Key
features of the reports include:
Market sizing
Forecasting
Benchmarking
HNWI asset allocation
Behavioral mapping
Family offices
ABOUT WEALTHINSIGHT
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Methodology
WealthInsight’s teams of in-house analysts devise and collect data over a historical period of
five years, and develop forecasts for a five-year forecast period. All WealthInsight wealth
reports are rigorously sourced and created according to a comprehensive methodological
process:
Internal audit
Review of in-house databases to gather existing data:
Historic market databases and reports
HNWI Database
Wealth management, private bank and family office database
Financial deals and news archive
Secondary research
Collection of the latest market-specific data from a wide variety of industry sources:
Government statistics
Industry associations
Company filings
Broker reports
International organizations
Primary research
Review of the latest wealth management and private banking industry trends
Surveys using panels compiled from across the wealth sector:
Wealth management and private banking professionals
Financial services experts
HNWIs
Expert opinion
Collation of opinion taken from WealthInsight interviews of leading industry experts
Analysis of third-party opinion and forecasts:
Broker reports
Industry associations
Wealth management and private banking media
Official government sources
Leading academic research and commentary
ABOUT WEALTHINSIGHT
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Data consolidation and verification
Consolidation of data and opinion to create historical datasets
Creation of models to benchmark data across sectors, asset classes and geographies
Market forecasts
Feed of forecast data into market models:
Macroeconomic indicators
Industry-specific drivers
Analysis of the WealthInsight HNWI Database and Wealth sector company databases
to identify key trends:
Latest wealth trends
Key drivers of the wealth management industry
Report writing
Analysis of market data
Discussion of company and industry trends and issues
Integration of survey results
Annual review of financial deals and wealth management trends
Standardization of market definitions using recognized industry classifications
Quality control
Peer review
Senior-level QC
Random spot checks on data integrity
Benchmark checks across databases
Market data cross-checked for consistency with accumulated data from:
Internal databases
Company filings
[CONTRIBUTORS]
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Contributors to this report:
Ouliana Vlasova
Head of Content, WealthInsight
Disclaimer
All rights reserved.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.
Please note that the findings, conclusions and recommendations that WealthInsight delivers will be
based on information gathered in good faith from both primary and secondary sources, whose
accuracy we are not always in a position to guarantee. As such WealthInsight can accept no liability
whatever for actions taken based on any information provided herein.
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