AU Small Finance Bank aiming to secure a share of wealth management biz

Although a small finance bank licence comes with certain restrictions on the lending side, there are no such restrictions on liabilities side, which is why the bank has ventured into wealth management

AU Small Finance Bank (SFB) is expanding its wealth management business, aiming to compete with larger players in the space to capture a bigger share of the market.

 

Although an SFB licence comes with certain restrictions on the lending side, there are no such curbs on the liabilities side. This is why the bank has ventured into wealth management.

 

This move aligns with AU’s aspirations of securing a universal banking licence. The SFB had applied for a licence with the Reserve Bank of India (RBI) in September last year.

 

What sets AU SFB apart from most competitors in this space is that it does not have its own securities arm, insurance arm, or mutual fund arm.

 

As a result, its portfolio selection remains unbiased, giving it an edge over other players in the segment.

 

“We have got a completely unbiased open architecture,” said Anup Agrawalla, president & head of wealth, AU SFB.

 

“This is a strong point for us as we only focus on a solution-oriented approach. The customer is interested in a solution from us and it could be backed by four or five product manufacturers,” Agrawalla said.

 

He added, “We have tie-ups with partners based on the solutions we want to provide to our customers.”

 

The lender has around 65–70 product tie ups with various manufacturers. The tie ups are expected to grow further for the bank.

 

Launched in April 2023, AU Small Finance Bank has assets under management (AUM) worth ₹1,250 crore.

 

“The AUM of ₹1,250 crore has happened by way of efforts in the last one-and-a-half years and it has taken a lot of convincing on our part to get customers to leave their big banks. Today, we have a set team; set platform; set products and solutions,” Agrawalla said.

 

“Our goal over the next five-six years is to continue growing our AUM on a quarter-on-quarter (Q-o-Q) basis, primarily focusing on equity-oriented AUM, which will include a variety of products,” he added.

 

He also said that the bank's wealth team will grow to 21-22 centres by the end of the coming year from 15 now.

 

Since wealth is a very well regulated business and has a low entry barrier, the products and solutions offered by the players cannot be different from each other. So, AU is looking to get more customers by improving its service.

 

According to Agrawalla, if AU secures a universal banking licence, a few things will change for the wealth business. They include shedding of the SFB tag, and thus, acceptability will go up.

 

“We may end up attracting more talent. For international customers, SFBs are a new concept. They will understand us better with a universal banking licence,” he said.