SBI to revamp Wealth Management biz, rope in consultant to firm up roadmap

Plans to grow by three-fold from current Rs 2.95 trillion

State Bank of India (SBI), the country’s largest lender, is planning to revamp its wealth management business, which currently has assets worth about Rs 2.95 trillion.

SBI’s plan is to rope in a consultant, which will help craft a strategy on premier banking services for high net worth clients.

A top SBI executive said while the wealth management business is expanding consistently, there is scope for growing it threefold.

Some key players in this space are Axis Bank with Rs 3.57 trillion assets under management (AUM), Nuvama Wealth with Rs 2.25 trillion and Anand Rathi Wealth with Rs 39,000 crore. Others include ICICI Bank, Standard Chartered Private and IIFL Wealth. Among public sector banks, Bank of Baroda has recently commenced this line of business.  

At present, much of SBI’s business is concentrated in big cities and is with aged people. But the scenario is changing with digital platforms and rising awareness.

Feedback from the branch network suggests that customers in tier II and III cities and young clients need a range of services quickly to manage their growing wealth, a top executive said.
 

In 2016-17, SBI commenced specialised services for high-value customers, that is, those with total relationship value of over Rs 30 lakh.

Later, it was rebranded as “SBI Wealth” with a separate vertical having institutionalised client engagement, relationship managers and thrust on marketing investment products.
 

Taking this business ahead, it began premier banking in the three circles of Delhi, Mumbai and Hyderabad in July 2022 for the mass affluent section.

The AUM of SBI Wealth management unit rose by 17.7 per cent year-on-year (YoY), to Rs 2.95 trillion in March 2023 from Rs 2.51 trillion a year ago.

Also, the number of clients grew by 21 per cent YoY to 350,000 from 290,000 at the end of March 2022, according to the annual report for FY23.
 

According to CRISIL Research, India’s wealth management industry, including banks and broking houses, is still at a very nascent stage with an AUM of Rs 25 trillion in the financial year 2021-22.

The growth in wealth management business is expected to be supported by significant under-penetration compared to other developed economies. Also, increasing population of affluent clients, greater shift from physical assets to financial assets and increasing complexity of assets are playing their part in this growth.
 

Some factors that would shape the market are a young affluent investor base, improving wealth levels, stronger regulatory environment, and an increasing share of organised players.
 

The SBI executive said the staff and managers at the wealth management unit are competent to manage the business.

The bank has also started the process of selecting a consultant to prepare a roadmap and guide it on the business side.

SBI has no plans to rope in a partner or sign a joint venture pact for wealth and premium banking business.

It would be managed internally, said a senior executive, who looks after SBI’s retail banking operations.

The wealth management market in India is pegged to grow at a compound annual growth rate (CAGR) of 12-14 per cent from March 2022 to March 2027 and may cross Rs 47 trillion by FY27, according to CRISIL Research.