Standard Chartered Bank Hong Kong’s retail banking segment contributed 45% to profit in 2021

• Sustained growth in retail customer base and expanded market share in credit card and bancassurance
• Digital service transaction volume grew 20% YoY
• Achieved growth in wealth management segment amid low interest environment

Despite the volatile market environment, Standard Chartered Bank Hong Kong (SCBHK) outperformed other retail banks in 2021 and was recognised as the Best Retail Bank in Hong Kong at the Excellence in Retail Financial Services Programme 2022 by The Asian Banker.

The bank’s retail segment contributed 45% to its total profit. The performance was attributable mainly to the successful implementation of its digital strategy and growth of its affluent client base.

Compared with other international financial hubs, Hong Kong succeeded in containing the spread of COVID-19 through strict quarantine rules and tight social distancing restrictions before a major outbreak of the Omicron variant in early 2022.

However, this came at the cost of diminished business activities and worsened credit environment, which reduced the retail banking sector’s profitability. Although retail banks in Hong Kong remained stable, the aggregate pre-tax operating profit of retail banks declined by 12.9% year on year (YoY) in the first three quarters of 2021, according to Hong Kong Monetary Authority (HKMA).

Sustained growth in retail customer base and expanded market share in credit and bancassurance

Amid downward pressure on the retail banking sector’s profitability in 2021, most banks recorded negative topline revenue growth, while SCBHK suffered less of a drop than its closest peers. 

Retail banking contributed 45% of total profit for SCBHK, ahead of its local peers. Despite the challenging environment, the bank was able to further expand its retail customer base to over 1.5 million in 2021. Total retail deposit increased by 2.1% YoY to $49 billion (HKD482 billion). The bank further expanded its market share for personal loan, credit card and bancassurance products in Hong Kong market, increased by 0.4, 0.1 and 0.6 percentage points respectively. In addition, SCBHK maintained its overall retail non-performing loans (NPL) ratio at low level of 0.16%.

Digital service transaction volume grew 20% YoY

For the past two years of the pandemic, SCBHK saw a significant shift in clients’ behaviour and banking practices. Branch transactions dropped by more than 40% because of strict social distancing restrictions. The biggest challenge for the bank was staying in touch with the clients alternatively and maintaining customer activation. In line with this, the bank continued to level up its digital offerings.

Since 2020, SCBHK has been building its suite of self-service digital capabilities ranging from current account savings account/time deposit account (CASA/TD) opening to online wealth products subscription. The bank also launched “My RM”, a digital platform that enables relationship managers (RMs) to conduct wealth advisory conversations with clients remotely.

In 2021, the bank took it a step further and introduced investment account opening for securities and funds in its mobile channel, expanding its online equities platform to include the US market. This enabled clients to take advantage of growth opportunities across Hong Kong, China and the US securities markets with a single account.

On top of the existing “My RM” platform, the bank added a deposit order taking function to better serve clients with deposit transaction requests, and Personalised Investment Ideas (PII) – an in-house tool which facilitates RMs in analysing clients’ investment portfolio and coming up with investment ideas based on house views, market insights, and clients’ holdings. With the implementation of all these initiatives, the bank saw a doubling of digital sales income and digital wealth income over the past two years, with digital transactions volume increasing by 50% compared to pre-pandemic period.

Furthermore, to answer the call of younger generation clients on more digitised customer experience, the bank collaborated with external partners to integrate banking services into clients’ daily lives. The bank partnered with AlipayHK and launched a co-branded Q Credit Card, which enabled the bank to tap into its three million large client base in Hong Kong. With straight-through processing (STP) capability, clients can enjoy seamless application, approval, usage and card management in one app, hence attracting clients who are digital savvy and looking for self-service banking solutions.

Overall, digital acquisition of credit cards increased almost 20% YoY, accounting for close to 80% of total card acquisition, in which 70% of applicants were younger than the average age in the bank’s portfolio.

Clients’ adoption of SCBHK’s digital capabilities has grown significantly. Digital service transactions grew around 20% YoY, accounting for more than 80% of all service transactions, while digital payment transactions grew close to 20% YoY, accounting for more than 90% of total payments and transfers. So far, the bank has a digital population of 1.2 million, with an active ratio at 60% and mobile active ratio at 44%, both were ahead of competitors. The bank’s digital net promoter score (NPS) continued to reach new heights and increased from 37 in 2020 to 48 in 2021,

Achieved growth in wealth management segment

To further meet customers’ wealth management needs, SCBHK up tiered its customer proposition with the launch of Priority Private (PP) segment for clients with assets under management (AUM) larger than $1 million (HKD8 million), expanded wealth solutions and opened a dedicated PP centre to provide a high-end client experience as RMs and clients engage in wealth advisory conversations in early 2021.

Since then, the bank’s PP client base increased almost 40% YoY while segment AUM increased close to 20% YoY. Among those who are upgraded to this segment, the bank saw a strong uplift of more than 80% in AUM growth and almost 130% in wealth income after three months.

To further scale affluent client growth, the bank partnered with Cathay Pacific, Asia’s leading travel and lifestyle rewards programme with 12 million members and 800 programme partners. As Cathay Pacific’s sole co-brand partner in Hong Kong, SCBHK HK launched Cathay Mastercard, which has a unique proposition of combining segment privileges with credit card, offering a full spectrum of elevated travel, lifestyle and banking benefits.

Not only did this enables the bank to tap into Cathay Marco Polo’s affluent client base, it also strengthened the bank’s affluent client positioning among competitors. Since launching, over half of the applications were from the affluent segment.

The bank was also among the first in Hong Kong to launch Wealth Management Connect (WMC), which allows clients to access investment opportunities in the Greater Bay Area. The bank ranked top in Southbound WMC sign-up among foreign banks in Shenzhen for several months in a row.

As a result, the bank achieved solid growth in its affluent and wealth management customer segment, with affluent client base growing 10% YoY, and segment AUM increasing 7% YoY in 2021. What’s more, the bank’s Greater China customer base increased by 19% YoY with AUM growing 23% YoY. So far, retail fee income accounts for nearly 50% of the bank’s total retail income, ahead of its peer banks in Hong Kong. For example, around 42% for BOC HK.

About The Asian Banker

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