Wealth Management at MCB

8/6/2019 Wealth Management at MCB

http://slidepdf.com/reader/full/wealth-management-at-mcb 1/17

Chapter 1 - Introduction

1.0 INTRODUCTION

This chapter provides an overview of the product being marketed and information on the

institution and its environment.

1.1 MAURITIUS COMMERCIAL BANK

The current turbulence in the global financial world may be a godsend for fundamental

and innovative rethinking and reshaping of the bank business sector. In order to sustain

the business growth and meet statutory guidelines, new products or services need to beintroduced on the local market. One among the new service the Mauritius Commercial

Bank (MCB) is introducing is Wealth management solution known as investment

management.

The MCB through its 170 years existence has become one of the leading financial

services group in the sub-Saharan Africa region employing around 2500 persons in its 5

lines of business:

(1) Corporate banking – Leader in this segment with 40% market share

(2) Retail banking – Wide ranging channel with 42 branches, 144 ATM’s

(3) Cards – Over 4000 point of sale

(4) International operations – Present in over 8 overseas countries

(5) Non-bank financial services – Leasing, equity financing & investment

management

1.2 WEALTH MANAGEMENT SOLUTIONS

Wealth Management solutions consists of advising investors on financial planning and a

number of other services. Wealth management solutions can either be provided by

banking institutions, financial firms, brokerages or trusted financial analyst. The target

1




group can be high net worth individuals, small business owners, institutions and families

with large bankable amounts.

Wealth managers coordinate retail banking, estate planning, legal resources and

investment management. Their work is highly dependent on the risk the client is willing

to take on investing; core objective being to enhance the income.

2.0 INTRODUCTION

This chapter defines the product with respect to what has been done worldwide and in the

Mauritian Context.

2.1 WEALTH MANAGEMENT

Vincent F. Yua and Hsiu-I Tingb define Wealth Management as an advanced type of

financial planning that provides high net worth individuals (HNWI) and families with

private financial services, such as asset management, banking, estate planning,

investment management, and legal resources. The goal of Wealth Management services

is sustaining and growing long-term wealth of clients; hence and it is based on a long-

term (Three or more years; in the context of accounting more than one year) consultative

relationship with the client.

2.2 WEALTH MANAGEMENT FRAMEWORK

For most banks/CPAs, providing this range of services means a significant shift from

simply offering traditional accounting services. But for those who are successful in

transforming their accounting practices into wealth management practices, there are

significant benefits:

• Wealth management complements the existing expertise of CPAs and leverages

the knowledge about your clients' lives that you already have.

2




• Its holistic approach enables the wealth manager to formulate better solutions to

clients' financial challenges.

• The comprehensive nature of wealth management offers you the ability to readily

differentiate yourself from your traditional competition--other CPAs offering only

accounting services.

• Because of its consultative nature, wealth management results in deeper client

relationships, which lead in turn to increased profitability and more client referrals.

Figure 1

WEALTH MANAGEMENT SOLUTIONS ON A GLOBAL PERSPECTIVE

Wealth management solutions have been undergoing enormous growth worldwide since

several years. The number of families with Asset Under Management (AUM) of over $1

million has been doubling every few years.

3




Wealth managers and private banks are anticipating unprecedented growth over the next

three years, according to the latest findings from PricewaterhouseCoopers 2007 Global

Private Banking/Wealth Management Survey, with chief executives predicting that, on

average, their assets under management will increase at a staggering rate of 30% per

annum. Famous organizations and banking institutions providing wealth management

solutions are Morgan Stanley, Merrill Lynch, Goldman Sachs, Swiss Bank, Saxo Bank

and Deutsche Bank amongst others.

2.4 THE MAURITIAN CONTEXT

In Mauritius, when advisors were asked what prompted them to pursue becoming a

wealth manager, the most common response was that they recognize that their clients

needed, and expected, more comprehensive advice and management. Basic financial

planning or investment management alone would not be sufficient.

After talking to different wealth mangers from different bank we have noted that any

Mauritian who has sufficient amount of money can be 1 million to any amount can invest

their money. But the main target markets are the big income household and biginstitution. Individual Client portfolios are made which will contain the customer needs

and the risk associated. The wealth is invested on both national and international market

shares, Treasury bond, real estate and insurance scheme. All the investments are done

relatively with the individual customer needs.

.

The Relationship-Profitability cycle

4




3.0 INTRODUCTION

This chapter describes the framework of the study and how the data was collected and

gives an overview of the methodology to be adopted.

3.1 METHODOLOGY

The following methodology shall be adopted for the project completion:

1) Conducting a Marketing Research

For the marketing research both primary and secondary methods have been used

to obtain qualitative and quantitative data.

Primary data:

i. A face to face interview with, Mr. Vishal Joyram, leader of wealth

management team of the State Bank of Mauritius.

ii. Phone interview with Mr. Didier Peten, head of the wealth management

team of AfrAsia Bank.

5




iii. Email and phone interview with Mr Hashim Jomaye, fund manager at

Mauritius Commercial Bank Investment ltd.

Secondary data:

Internal

i. MCB Bank brochures to have an idea on their current marketing

campaign.

ii. MCB Bank annual reports to have an idea of their Mission, Vision &

Objectives.

External

i. Central Statistic Office to have an idea of the percentage that the target

market represent.

ii. Annual Budget journal of the Minister of Finance for year 2009 to see

the extent at which management is involved in the economy.

2) Determining the strategic intent behind the product

3) Defining the target market

4) Establishing how the product will add value to the market

5) Devising a proper promotional plan

The methodology to be adopted for the completion of the project is illustrated in the

flowchart below:

6




4.0

INTRODUCTION

This chapter deals with the strategic analysis. It describes the strategic intent behind the

product, the target market segment definition, how the product will add value to the target

market, and the awareness campaign and promotional plan for the product.

4.1 STRATEGIC INTENT BEHIND THE PRODUCT

Today, The Mauritius Commercial Bank Ltd is considered to be the leader among

commercial banks in the Indian Ocean. In order to sustain its leadership, to survive in

this competitive business arena and provide high level of service to its customers, it has

7

Wealth ManagementSolution

Primary

ResearchSufficient?

Secondary

ResearchYes

No

PrimaryResearch

ResearchData

Define Company'sIntent

Is it meantfor

everybody?

No

Define SpecificTarget Market

Yes

Establish how the product willadd value to the target market

Devise a proper promotional plan

End




become imperative for MCB to invest in new products and services. One of the core

values of MCB is innovation. Another reason for introducing wealth management

solutions is differentiation. This will be a means to gain a greater share of clients’ wallets

or to attract new clients.

Nowadays, wealth management solution is one of the fastest growing segments of the

financial services industry. In response to the demand from and competition for the

wealthy individual client, many commercial banks and private organizations are offering

wealth management services. While the rapid growth of the personal wealth of the

Mauritian citizens has raised more and higher demands for financial services both in

depth and breadth, the MCB also has an inherent impulse for financial innovation in

order to realize strategic transformation. Wealth management can combine the two

effectively to meet the demands of both sides.

4.2 TARGET MARKET SEGMENT

Kerin (2003) defines market segmentation as a process of dividing the total market for a

good or service into smaller, internally homogenous groups.

Our main target will be the High Net worth Individuals (HNWIs) holding more than Rs1

million. HNWIs are usually affluent individuals who have already accumulated huge

amount of wealth and entrepreneurs who have built successful million-worth businesses,

yet are seeking more opportunities to grow their business, assets as well as their personal

wealth.

Wealth management and investments holds no guarantee on return. It is meant for

customers who can afford a high level of risk with large capital. Wealth management

firms have traditionally targeted only the wealthiest customer segments because only

these customers can afford the high end service and risk. High net worth (HNW) clients

expect their advisors to have specific and extensive expertise.

Another way of targeting mass affluent will be through demographic segmentation

4.2.1 Demographic Segmentation

8




Demographic segmentation consists of dividing the market into groups based on

variables such as age, gender, family size, income, occupation, education, religion, race

and nationality. For the purpose of our study it has been decided to segment the market

in terms of age group, income and occupation as follows:

Age group above 25 years of age This will be explained through the

Customer Life Cycle.

Income above Rs 1,000,000 annually As the income level goes up, life

expectancy increases life style

requirements increase.

Occupation Company CEOs, Directors,

Managers, Businessmen, Senior

Officers in the Public and Para-

statal Bodies

Occupation tells a lot about the

behaviour of the individual. Top

Managers of companies are well

educated, confident, and very busy

person, who is likely to appreciate

professional advices on their assets as

well as business.

Table 4.1: Demographic segmentation

4.2.2 Geographic segmentation

Geographic segmentation tries to divide markets into different geographical units like

regions, countries among others.

The Map of Mauritius shown hereunder indicates the branches of the MCB. The main

regions shall be represented by specific branches. The main branches will have offices

for the Wealth Management Solution and other branches will need upgrade. MCB has

main branches in:

• Curepipe (attracting HNWI’s in Curepipe/Floréal)

• Rose Hill (attracting HNWI’s in Rose Hill, Ebene, Beau Bassin)

• Port Louis (attracting mainly the companies with high bankable asset)

• Flacq (HNWI’s in flacq and eastern coastal region and small businesses)

9




• Grand Bay (HNWI’s, big companies in the northern coastal region)

The other satellite branches will after upgrade shall promote the Wealth Management

Solutions as well as providing the related services. The selected satellite branches shall

be:

• Rose Belle (attracting HNWI’s in the southern region)

• Vacoas (attracting HNWI’s in Vacoas region and also businesses)

• Quatre Bornes (attracting HNWI’s in that region and mainly Sodnac)

• Tamarin (Newly installed HNWI’s in that region)

10




Figure 4.0: Map showing branches of MCB (MCB Annual Report, 2008)

11




4.3 VALUE-ADDED FOR THE TARGET MARKET

High Net worth individuals are usually persons with high bankable asset and who are

willing to invest those assets or capital in order to maximise their growth. Wealth

Management Solutions at MCB at first shall target most the HNWI’s then at a later stage

to other investors.

This product in itself provides a new kind of financial framework for services such as:

private banking services, asset management, estate planning, investment management and

legal resources.

4.3.1 Time is money

HNWI’s are usually persons at the head of multinationals, organisations and/or retired

persons with their lump sum. Wealth Management Services, being a complete well

organised product, can help a lot to investors who are very busy in their work. There are

usually 2 ways for proper wealth management:

Personal Management – i.e., the investor takes in charge and carries out the

follow-up of his investment.

Experts – i.e., leaving everything in the hands of experts for them to invest on

handpicked selection of best available investment products in the local or global

market after an analysis of market conditions and economic trends.

However in both cases, customers are informed through seminars and/or video

conference organised to keep in touch with them and to show the variations in the market.

4.3.2 Proper risk profile for specific customers

This can be very important for specific customers. Whenever a client wants to invest, a

risk profiling is made to know the level of risk the investor want to take depending also

on short term and long term goals. Based on the risk profiling, a strategy is developed

that matches the profile of the investor agreed upon and an optimal portfolio of service

and the related product is selected. Hence with WMS investors shall no longer invest

blindly on products with undetermined risk level.

12




4.3.3 Alternative to continually decreasing interest rate on savings

Following the recent decrease in the savings in Mauritius; 12.8% of GDP (CSO, 2009),

banks and other financial institutions have to provide other new financial products. One

of the features in Wealth Management Solutions is fixed term deposits. Big capital when

invested on the long term (> 3years), preferential interest can be obtained usually be the

order of 5 – 10% depending on the capital deposited. Most of the time, the rate proposed

to customers is 1% minimum above the average savings rate. Since the amount to be

invested is the result of enormous hard work and efforts, term deposits can constitute a

very good alternative to the usual saving for the cautious low risk taking investor.

4.3.4 Modern and daring customers

For modern, daring and risk taking investors who are internationally focussed, this

service can invest their capital on local and international stock exchange. This can be

valuable because dividend obtained from stock exchange investment is not taxable.

Wealth Management also invest in bonds this can be very interesting for investors willing

to take medium to high risk.

4.4 AWARENESS CAMPAIGN AND PROMOTIONAL PLAN

4.4.1 Introduction

Established in 1838, MCB is a prominent banking and financial services provider in the

Indian Ocean whilst being the undisputed leader in Mauritius. In order to stay in the

competitive world MCB is doing its promotional campaign to launch its new services

which is wealth management solution.

4.4.2 Promotional strategies

Based on Ansoff’s marketing strategies wealth management solution is one from product

development section. It’s a new product targeting mainly existing clients with objective

to increase sales of the wealth management services. It is a new product and it is in its

introductory stage of the PLC. Since it is in its introductory phase the product choice

effect is very high but the choice towards MCB is less effective so in our campaign we

are trying to expose and propose to potential clients of wealth management services with

13




added services to the package. We are trying to select our target market and try to

convince them about our new product.

We are using the 5 promotional mix and the steps in order to develop an effective

promotional plan.

Our steps are as follows:

• We identify the target audience that is will be the high income class people.

• Our promotional objectives will be to grow, be profitable and sustain in the wealth

solution and have at least 100 billion of assets to manage until 2015.

• Our killer line is “Wealthvantage your dream”.

•

We will use television channel and press media to do our launching.• The pie chart shows our advertising expenses:

• Our total budget will be 3 million:

ADVERTISING QUANTITY TOTAL COST

Brochure 1000 12000

Express newspaper 3 204000

Billboard 3 1600000

Bill board plastic 3 placed in 3 main branch

premises

155000

Extra large poster 10 135000

MCB Night four points 200 280000

MBC static poster 30sec(3 month) Madvi give the price

Golf day Belle Mare 25 Asvin will give the price

14




Plage

BUDGET 3 million

• Our promotional mix is as follows:

• Advertising: billboard, newspaper, business magazine

• Sales promotion : special offer packages for first 100 customers

• Direct Marketing :face to face and customized solutions

• Public relations/Publicity : sponsor a night at Sheraton hotel with press

coverage

• Finally we will do small questionnaires in order to get the feedback of our

customers.

Advertising and promotional campaign are done in order to make people familiar with

this new product MCB is launching. Details and explanation need to be given to people

so that they understand and are willing to opt for this new product.There is a budget allocation of three million for the promotional and awareness

campaign.

We will do a marketing concept that is a product with added value and more effective

vis-a-vis to competitors in order to attract more people from the target market.

Our mode of promotional and awareness campaign will be according to the pie chart

below:

Budget of 3 million:

• 1000 Brochures at R12 rupees for 1 A4 coloured glossy paper excluding design at

Sokhee limited

• 3 Wednesdays in the Express economy section (freely attached to the Wednesday

express) in colour at the cost of 68000 rupees for one Wednesday.

• 3 billboards at 3 business strategic place one in Ebene cyber city near tower1 in

BPML premises , the second one at Caudan waterfront near Labourdonais hotel

and the third one at grand bay near the Grand Bay Conference Centre each costing

15




155000 VAT included and to set up but excluding fees for renting the space

occupied by the boards.

• 10 extra large plastic posters done at xyz studio each costing 9000+15 % VAT

excluding design fees which will be placed at 10 most important MCB branch.• A Friday MCB night at Sheraton four points with 100 target customers and a

guest per target customers and free buffet and juice will be offered costing 1400

per person.

• MCB 30 second static poster before the 19h30 news on the MBC

ADVERTISING QUANTITY TOTAL COSTBrochure 1000 12000

Express newspaper 3 204000

Billboard 3 1600000

Bill board plastic 3 placed in 3 main branch

premises

155000

Extra large poster 10 135000

MCB Night four points 200 280000

MBC static poster 30sec(3 month) Madvi give the price

Golf day belle mare plage 25 Asvin will give the price

BUDGET 3 million

This is the perfect right moment that we are going to launch our product since

interest on savings are at 4.5% and our aim is to make our target market realise its

more profitable to invest the money rather than having interest on large fixed

deposit. We are going to play with psychology and try to compare wealth

management advantages to that of fixed deposit and making the target market

aware of the higher the risk involved the higher will be the gain.

5.0 INTRODUCTION



16




5.1 RECOMMENDATIONS

6.0 INTRODUCTION



6.1 CONCLUSION

7.0 CONCLUSION

In the light of the above, it is obvious that Wealth Management Solutions being a new

product in the arena of financial sector, its marketing to attract High net Worth

Individuals is quite a big challenge. But as said by Charles Dicken of the French

Revolution in A Tale of Two Cities, written 100 years ago: “It was the best of times; it

was the worst of times.” Today, with its new killer line “MCB Futurise your Dreamzzz”,MCB is surely providing convincing reasons to believe that they can and they know how

to achieve their goals. This makes MCB’s knowledge the central theme of the campaign

and focuses the advertising more clearly and directly on its unique capabilities. Hence,

WMS will continue to evolve MCB to meet changing clients’ needs and expectations and

to survive in this dynamic competive environment.

17

Documents

Wealth Management at MCB