Segment which accounts for 6% of population still underserved

PETALING JAYA: After gaining a foothold in the premier banking segment, many banks are now looking to expand their revenue base by targeting the underserved growing mass and emerging affluent market which accounts for some 5% to 6% of the country's total population.

OCBC Bank (M) Bhd head of mass affluent Teh Bee Gaik said the mass affluent segment was currently underserved as most banks do not target this group specifically but rather they tend to focus solely on the high net worth individuals, broadly referred to as the premier banking segment.

Even today, she said only a handful of banks were looking seriously at meeting the specific needs of the mass affluent segment.

She said a mass affluent customer would contribute to three or four times the revenue brought about by a regular mass retail customer.

"We estimate the mass affluent segment to comprise around 1.4 million people nationwide, which is roughly 5% of the country's overall population and expect this segment to grow by 5% each year. The mass affluent segment encompasses broadly those earning between RM5,000 and RM20,000 a month compared to the premier banking segment, which most banks tend to define as those with total assets under management of about RM250,000 to RM300,000,' she told StarBiz.

Teh said the mass affluent customers were time-stressed individuals, namely those on the fast track and with little time to spare. They could also be defined as those whose next stage would, ultimately, be premier banking, she said.

The bank, which currently has about 10% market share in the mass affluent market, via its mass affluent banking platform iQ, hopes to chart an annual growth rate of 10% to 15% by year-end.

Through the cash flow management facility of the iQ platform, she said customers no longer needed to initiate payment transactions for utility bills, mortgage or car instalments as these would be left to the bank to remember on their behalf instead.

This also include personal and non-banking needs like access to services such as 24 hour-auto assist, home assist, restaurant delivery service, gift delivery, personal shopping, air ticket bookings and others.

Standard Chartered Bank Malaysia Bhd country head for consumer banking Tiew Siew Chuen said the bank was ramping up its business to serve this untapped segment. To this end, it launched Preferred Banking in August this year.

She said that with this service, the bank aimed to reach 200,000 customers in this market segment within two years.

Tiew added that the emerging-affluent segment in Malaysia was one of the fastest growing and most attractive demographics for consumer businesses, with banking as no exception.

This underserved segment numbers 1.6 million in Malaysia and constitutes 5.7% of the population, she said. From 2005 to 2009, she said, this segment grew at a compounded annual growth rate of 17% despite the challenging economic conditions of the past year.

The segment, she added, was also dominated by young, upwardly mobile executives, professionals, couples and families comprising over 44% of the emerging-affluent segment in 2009 and representing nascent and untapped potential.

HSBC Bank Malaysia Bhd general manager for personal financial services Lim Eng Seong said the bank's core focus had always been on the mass affluent segment.

He said this was in line with its ability to tap on the group's global knowledge and wealth management capabilities coupled with its ability to provide international connectivity.

Lim said the bank was expecting double-digit growth over the next three years as the country continued to progress and create new wealth.

- The Star Online