Private Banking and Wealth Management - The Present Indian Situation

Private Banking and Wealth Management - The Present Indian Situation

Alok Saigal, President & Head, Nuvama Private, 0

Alok Saigal, the President and Head of Nuvama Private, has been an integral part of the firm since 2014. With his visionary leadership, Alok has played a pivotal role in the transformation and expansion of the wealth business. He has over two decades of experience across diverse segments of India’s financial markets & a master’s degree in economics from Delhi School of Economics. He has worked in critical and diverse roles across Nuvama, erstwhile Edelweiss Financial Services, Darashaw and HDFC Bank. In a recent interaction with Bimlesh Prasad (Correspondent, CEO Insights), Alok shares his views about the wealth management and India's private banking industry. Below are the excerpts from the exclusive interview:

How do you assess the journey of homegrown private sector banks in India?
If you go back a decade, the foreign banks were dominating the private banking industry globally and in India, while very few Indian players had forayed into the private banking space. However, in the last 10 years, we have witnessed a rapid shift in the demographics of the Indian Private banking landscape, where domestic private banks have managed to capture a large market share thanks to the full stack platform which there is able to offer to their customers. Today, the domestic private banks dominate the wealth management landscape thanks to a full stack tech driven platform coupled with their tailor-made approach for meeting each clients’ diverse financial requirements.

What changes do you foresee in India's financial markets as macro-economic variables change?
Like most markets which have developed over time, the Indian markets are currently going through an evolutionary phase. India is one of the fastest growing economies in the world today and is witnessing a considerable amount of wealth creation. We are seeing a lot of Mergers & Acquisitions (M&A) and an increase in investments from private equity players in the Indian markets. At present, the total value of assets in the Indian households is close to $8 trillion including real estate assets of which, the organized wealth market is a very small fraction. We have observed two major trends in India- the growth of overall wealth, and the unorganized wealth becoming organized. The regulatory policies are quite favorable and big organizations are largely benefiting from the same. This presents a huge opportunity for wealth management in India which was not the case earlier.
Today, investors in India have started to understand asset classes beyond fixed deposits, gold and real estate investments. The introduction and the adoption of Unified Payments Interface (UPI) post the demonetization and the Covid-19 pandemic has led to an increase in financialization of assets in the country. Besides, tier-II cities in India are becoming increasingly prosperous and the spirit of entrepreneurship in these cities is thriving. As a result, many of such cities in India today are poised to become tier-I cities in the near future. This will lead to a further expansion of wealth creation in India.

Market dynamics of India’s banking system have changed in recent years. According to you, how do these dynamics and Initial Public Offerings (IPOs) of private sector banks impact the wealth sector in India?
India is currently being viewed as one of the preferred destinations for investments, given the geo-political situation across the globe. Both the financial markets & the banking sector is thriving on the positive economic backdrop. Plus, more and more Indians are realizing the importance of preserving & compounding their wealth, which is possible, by looking at investment opportunities beyond the traditional asset classes, something which wealth managers specialize in. The number of UHNI’s are also supposed to grow by 60% over the next 3 years according to some studies. The growth of both the number of prospects, and the awareness amongst these prospects of the benefits of dealing with a private banker will only help in long term prosperity of the Indian wealth management space. This has resulted in significant increase in the private equity money which is being invested in the Indian wealth management space as well as successful IPO’s of private banks. The opportunity size is large, and there are very few negative barriers to stop the growth.

India is currently being viewed as one of the preferred destinations for investments, given the geo-political situation across the globe.

Could you shed some light on how evolving needs of clients are changing the private banking sector in India?
There has been a cultural shift in the Indian UHNI mindset, thanks to inter-generational transfer of wealth, emergence of the new age entrepreneur & the growth of the Indian wealth management landscape. All these 3 factors have been critical in the client wanting to explore alternative options such as REIT’s, PE/VC Funds beyond the traditional asset classes such as equity, debt. Today, products’ offerings have become wider, and this is reflected in the range of services private sector banks have begun to provide. From a single product window of investment options, today, private sector banks provide an array of services including M&A , IPOs, stake sales, advising on corporate structure, wealth planning, ring fencing of assets and succession planning among others.