A top SBI executive said while the wealth management business has been expanding consistently, there is scope for growing it three-fold from the current level.

At present, much of the business is concentrated in big cities and is with aged people. The scenario is changing with digital platforms and rising awareness. The feedback from the branch network suggests that customers in tier-II and III cities and young clients also need a range of services in quick time 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 institutionalized 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 assets under management of SBI’s Wealth management unit rose by 17.7 per cent year-on-year, 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 March 2022, according to the annual report for FY23.

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

The growth in wealth management business is expected to be supported by significant under-penetration compared to other developed economies, increasing population of affluent clients, greater shift from physical assets to financial assets and increasing complexity of assets amid rising competition.

Some of the 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, including banks, independent wealth advisors, and brokers.

Some of the key players in the wealth management market are Axis Bank, ICICI Bank, Standard Chartered Private, IIFL Wealth, Anand Rathi Wealth and Ask Wealth. Among public sector Banks, Bank of Baroda has recently commenced this line of business.  

The SBI executive said the staff and managers at the wealth management unit are competent to manage business. However, they need orientation and the system needs renewal to make it more efficient, giving rise to the need for expert advice.

Hence, the bank has begun the process of selecting a consultant to prepare a roadmap and guide on the business side. There are no plans to rope in a strategic partner or sign a joint venture for wealth and premium banking business. It would be managed internally, said a senior executive who looks after SBI’s retail banking operations.