talks to Owen Belman, head of consumer banking for Standard
Chartered Hong Kong, the bank’s largest and most profitable
consumer banking business. He tells her he is optimistic about
future growth in the country, with plans to expand its branch
network and relaunch its online platform.
Standard Chartered, the winner of RBI’s 2007 Best Retail
Bank-Asia (see RBI 589), posted record pre-tax profits of
$4.04 billion for 2007, up 27 percent compared with 2006, with the
bank’s retail arm delivering a 25 percent increase in pre-tax
profit for the year to $1.67 billion.
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A major contributor to the group’s outstanding results for
2007 was the performance in Hong Kong, where the bank is listed on
the local stock exchange in addition to its London listing.
Its consumer banking arm posted a 22 percent increase in profits
and a 17 percent increase in income, the first time in six years it
has achieved double-digit income growth. Including the bank’s
wholesale banking arm in Hong Kong, the region contributed profits
up 34 percent to just under $1.2 billion, more than the entire
group did in 2001.
Owen Belman, the recently appointed head of consumer banking for
Standard Chartered Hong Kong, started in Singapore as the bank’s
group head of deposits and transaction accounts within the wealth
management division. He has since served the bank in the
Philippines and Dubai as consumer banking head before starting in
Hong Kong in January.
In an interview with RBI in his office in Hong Kong,
Belman said: “Last year was a fantastic year for us in the country
and consumer banking level in Hong Kong.
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By GlobalData“It was also the year when we achieved double-digit top-line
growth and bottom-line growth. This was the first level of such
growth for many years as the business has faced challenges in the
market such as SARS and the bankruptcy situation a few years back.
Increased competition has tightened margins but it was a fantastic
year for us as a bank and consumer bank.”
The main growth drivers were the wealth management and SME
banking businesses, added Belman.
“In wealth management, bancassurance, structured products and
saving accounts were the prime sources of growth. It was also a
strong year particularly in the second half for investments. For
SMEs, it was core operating accounts as well as treasury products,
trade and working capital.”
Hong Kong has the world’s highest density of millionaire
households. Among a population of just 7 million there are 597,000
households with net worth in excess of $1 million, and the number
of wealthy households is expected to increase to 980,000 by 2017
according to forecasts by Barclays Wealth and the Economist
Intelligence Unit (see RBI 592).
The bank has launched a Hong Kong-focused private banking
business as part of its recent re-entry into the market. Unlike
most other international private banks, Standard Chartered’s
private banking is a division of the consumer bank.
Although this strategy has elicited criticism from its
competitors in the private banking space, Belman said: “We think
this is an advantage for us because it strengthens the consumer
business and we reap economies of scale through the back-office
operations especially in terms of product development. It also
gives us a good career trajectory for our staff to move up from
priority banking to private banking.”
Belman plans to expand the bank’s distribution network. There
are 75 branches in the network currently. “We are the only major
bank that grew our network last year,” he says. “We did 10 projects
on either new branches or relocation.
“We are firmly committed to branch distribution and building our
network and we will continue to do so. There are a number of
locations that we would like to be in that we are not – either
additional catchment areas or those where we do not have optimal
locations.
“We look for areas that offer a good mix and potential for both
the retail and SME banking businesses.”
In addition to the branch network, the bank is also looking to
grow its ATMs and alternative channels network such as internet,
online trading and mobile banking.
Belman will launch a revamped internet banking platform later
this year and has recently launched an online trading platform.
Online securities trading make up over half of its transactions and
the number is growing by the day. “Customers definitely want to
transact online and more so in specific segments,” Belman said.
Focusing on the customer experience
Customer experience is the new mantra for Standard Chartered’s
consumer banking operations across the region and this resonates in
its Hong Kong operations. “I am hugely excited about our shift to a
more consumer-centric model. We want to have higher relationship
manager coverage of our best customers and this means increasing
our relationship manager force,” Belman stressed.
“It is important to innovate around the end-to-end customer
experience. It is about really understanding each touchpoint from
the moment you sign up the customer to greeting the customer, the
queue experience, transaction handling and leaving the branch.”
He wants to drive out what he calls non-value added time and
unpaid work. For example, he says, standing in the queue qualifies
as unpaid work.
“Non-value added time is the amount of time our front-liners
spend doing an activity the customer would not willingly pay for.
The unpaid work is the amount of time we ask customers to do things
that we are not paying them for but is essentially work for them,”
he elaborated.
“We ask our front-liners to be almost like librarians – they
have to go to many different places to pull information so they can
have an intelligent conversation with the customer. If we, as an
organisation, did a better job of consolidating information and
presenting it to front-liners in an easily accessible manner, they
can use their time more efficiently.
“Customers are getting more sophisticated and want a better
customer experience. I think the industry has a big opportunity in
this area and that is something we are committed to changing.
Retail banks do need to think like retailers.”
He cites Apple as a good example of “how to think of the
customer experience explicitly as opposed to implicitly”.
“Apple has taken the experience of going to buy one of its
products and fundamentally changed it… Putting aside the fact
Apple products are sexier and tend to be more innovative, you can
demo the product and talk to somebody who has deep product
knowledge. You will learn something innovative just by going into
that space. That is not by accident, that is by design. They have
thought about the experience for customers and front-liners. We are
re-thinking and re-designing those ourselves.”
He envisions his model bank branch to be warm, welcoming and
uncluttered. “From a layout perspective, it would facilitate a
pleasant experience; the queue experience will be informative and
entertaining,” he said.
“There are opportunities for self-help yet face-to-face meetings
have the right level of privacy and comfort. New technologies can
come into that and support each aspect of the customer
experience.”
In one of the bank’s branches in Singapore, for instance,
customers are informed via text message when it is five minutes to
their turn to allow them to go around the shopping centre where the
branch is situated.
Optimistic about Hong Kong growth
Although conscious of the doom and gloom ringing through the
international markets, Belman is still optimistic on growth in Hong
Kong. “2007 was a fantastic year but 2008 will be more challenging.
Our view is that GDP will grow at a slower rate this year than the
last. If the Hong Kong unemployment rate were to rise, we will see
deterioration in credit quality although the market is a lot less
leveraged than it was before the bankruptcy crisis. This will
affect the lower income but as you move to the mass affluent and
upper market, their concern is more on investment returns.”
He added: “As a company we are very bullish on Hong Kong. It is
a sophisticated market with strong links to the mainland. However,
the next 12 months will be turbulent. It will be naïve to think
none of what is happening around the world will not impact the
region.”
While Standard Chartered has predicted that GDP growth rates may
soften slightly in its target Asian markets, with the slowdown in
the US having at least some effect on markets in Asia, Africa and
the Middle East, these economies will remain robust and their
growth will be significantly higher than that expected in the US
and Eurozone (see bar chart, above).
