The profile of well-heeled South Africans is changing dramatically and financial institutions need to recognise these changes and accommodate them, according to the CEO of First National Bank (FNB) Private Clients, Eric Enslin.
Enslin was speaking at the introduction of FNB’s new private-banking initiative in Johannesburg on Wednesday, which is aimed at capturing a leading share of the changing market.
“Already, black South Africans with annual earnings of R750 000 or more make up 30% of a market that is estimated to have an annual revenue potential of more than R7-billion.
“These individuals account for the fastest-growing segment of the market — in contrast to the white segment, which has remained more or less constant at just over 60% of the market,” he said.
“That is not the only dynamic. More and more business owners make up this market — 74%, in fact — while the market is also getting younger, with 58% now under 45 years of age.”
Enslin added that these figures clearly demonstrate that wealth is shifting.
“The currently buoyant economic conditions are the perfect breeding ground for young, dynamic people to turn their business dreams into reality. All these elements of transformation create great opportunities for FNB to become a major player in this market,” said Enslin.
In addition, FNB has other intentions regarding its private-client initiative.
“We have some 30 000 clients with FNB who are eligible for private banking. [At present], their needs are met from outside of FNB and we intend to draw them into the FNB domain,” he noted.
“Loyal FNB clients from the upper-middle and premier market segments will now also have an established home waiting for them when they move on upwards to the wealth segment as their net worth grows,” Enslin said.
FNB’s private-client initiative arrives hot on the heels of a banking-industry-wide initiative benefiting the previously unbanked, and signals the bank’s clear intent to cater for both ends of the economic spectrum.
Enslin, a former Rand Merchant Bank (RMB) Private Bank executive, said FNB is ready to hit the ground running.
“We have assembled a top team of advisers, who each have at least 10 years of experience in wealth management and who come to FNB Private Clients from the nation’s top institutions.
“They will have access to the full spectrum of FirstRand expertise, including RMB and Momentum. Collectively, these institutions boast a long-established and impressive track record in financial planning, asset management and structured lending that is hard to beat,” he added.
He said that the team will have a regional focus, giving FNB insights into the wealth-management market in different parts of South Africa.
Enslin added that while the local high net-worth banking market is crowded and fiercely competitive, there are notable growth opportunities.
“The benefit of being a latecomer to the industry gave us the opportunity to take a fresh look at the wealth market. Being multibanked and invested, client’s investment environment is product-focused and not solution-based, offering no holistic viewpoint of their finances.
“Our approach is to provide an integrated financial solution in addressing all wealth and lending needs, while leveraging off existing transactional banking relationships. We believe that this clear market focus is the key to our success.
“We will dispense with the old-style elitism surrounding private banking and concentrate on building financial relationships with our clients that add value to their lifestyles.” — I-Net Bridge