HSBC is setting its sights on doubling the assets under management (AUM) in its British wealth division to £100 billion ($131 billion) over the next five years, as the bank seeks to capitalize on the growing mass affluent market. Jose Carvalho, the head of HSBC’s UK wealth and personal banking division, emphasized the bank’s strategy of leveraging its global presence to attract customers with international banking needs.

“International connectivity is our competitive advantage and is driving growth,” Carvalho told Reuters. With a global asset management portfolio valued at $712 billion, HSBC plans to expand its advisor team in the UK, though specific hiring numbers were not disclosed.

The UK wealth management market is currently dominated by St James’s Place, which reported AUM of £168 billion at the end of last year. The biggest UK banks collectively earned $12 billion from wealth management in 2023, an 11% increase year-on-year, with projections of 7% growth in the overall wealth sector.

HSBC’s approach aligns with other major UK banks, such as Barclays and Lloyds, which have also announced plans to target the mass affluent segment—defined by Lloyds as customers with deposit balances between £75,000 and £250,000. This segment holds approximately £4 trillion, representing half of the UK’s wealth market.

The bank’s strategy to engage the mass affluent market includes enhancing digital and mobile banking services and promoting long-term investment options to customers with significant savings. “For the mass affluent market, banks are pursuing a hybrid model of digital technology combined with advisers,” noted Grace Miu, head of wealth at Coalition Greenwich. This model is expected to appeal particularly to younger clients who are more inclined to use digital financial services.

However, experts caution that the market is becoming increasingly crowded. “The demand for wealth management services continues to grow, but competition is high as almost every major bank has now declared its ambition to take a bigger slice of the pie,” said Nigel Moden, EMEIA banking & capital markets leader at EY.

While HSBC is optimistic about its growth prospects, industry experts warn that the collective ambitions of major banks may exceed what the market can realistically deliver. “There will likely be disappointments,” cautioned Christian Edelmann, managing partner for Europe at Oliver Wyman.

As HSBC moves forward with its expansion plans, it faces the challenge of standing out in a fiercely competitive market where technological advancements and shifting customer expectations continue to reshape the landscape.

(Adapted from Finimize.com)