Competition in the wealth management business has recently intensified, with major local banks giving more attention to the country’s growing middle-class to maintain their growth.

Banks such as ANZ Indonesia, Bank Negara Indonesia (BNI), Bank Mandiri and Standard Chartered Bank have designed their own investment packages to lure customers from the country’s growing middle-class to use the banks’ wealth management services.

In addition to the increase in investment options, the banks have also placed more resources and marketing effort into expanding their wealth management services.

ANZ Indonesia vice president director and consumer banking head Ajay Mathur said the demand for wealth management services had grown as more people sought other forms of investment options, beyond time deposits or savings, to get higher returns.

Banks should be more creative and offer investment products and services, as unlike in Western countries, the Indonesian middle-class focused more on capital gain than on capital preservation, Mathur said.

“Here, customers are seeking greater returns on every rupiah they spend, so they are seeking products that give them that kind of return,” he added.

Under its signature priority banking program, ANZ offers investment products such as bonds, mutual funds and insurance to its 30,000 clients whose annual income starts from US$50,000. Mathur said the bank cooperated with its Australian partner in determining and creating investment products and services to its Indonesian customers. He said with its Australian connection, the bank could, for example, provide more reliable advice related to investing in the Australian dollar.

ANZ Indonesia’s priority banking and wealth management services currently contribute to about 30 percent of the bank’s total revenues. In 2013, it aims to record a 35 percent growth in its wealth management by launching new products and collaborating with a new investment management firm.

According to a recent report by global consulting firm McKinsey, the financial services industry in Indonesia, specifically savings and investments, is expected to become the fastest-growing segment, with double digit growth between 2010 and 2030.

And as household income increases, as does the share of income that people spend on discretionary goods and services, including savings and investments.

BNI is also increasing its marketing efforts to expand the bank’s wealth management services.

The bank’s deputy head for consumer and retail product management, Teddy Atmadja, said the bank would open more executive lounges in the country’s major airports to tap into the country’s growing middle-class.

By opening more executive lounges, the bank’s customer service managers would have the chance to speak to more affluent people about a wide range of wealth management services provided by the bank.

“So far, government bonds, equity funds and fixed-income funds are three investment products that are most preferred by customers,” he said.

To ensure its pool of potential clients, the bank would also tap into its developing affluent segment of younger and technologically savvy customers. “We need to nurture the younger clients by providing attractive products and easy access to our financial services,” he said, adding that the bank’s state-owned enterprise status provided leverage as it offered a sense of financial assurance to its would-be customers.

BNI expects a double increase in revenues from its wealth management services to about Rp 100 billion ($10.3 million) by intensifying services to high-end clients through its Emerald priority banking service. The bank has between 14,000 and 15,000 Emerald clients, whose deposit amount exceeds Rp 1 billion per person.

Like BNI, British-based Standard Chartered Bank is also targeting young professionals to expand its business by holding annual wealth management seminars in several cities. According to Standard Chartered’s wealth management general manager Lanny Hendra, young professionals have enough savings to invest and are more financially literate.

“For the last several years, we’ve seen an increase in the number of young clients within our customer base, including the children of our more advanced customers. All of them are already using investment as a way to prepare their futures,” she said.

Lanny’s statement is in line with a recent Visa study, which reveals that young Indonesians are more attracted to various financial products and have the money to spare. According to the study, Indonesians aged 18 to 28 have an average monthly income of $622, of which only 50 percent is spent.

Contacted separately, Bank Mandiri, another state-owned bank, expects the growth of high-net-worth individuals in the Asia Pacific region to impact positively on its priority banking and wealth management businesses.

Mandiri senior vice president for mass banking Riza Zulkifli said the bank reshaped its wealth management strategy last month by increasing customers’ minimum balance benchmark to Rp 1 billion from the previous Rp 500 million for each client. Given the increasingly fierce competition, Mandiri would manage its priority customers personally, so that they would increase their share of wealth, he wrote in email sent to The Jakarta Post.

This year’s competition will even be tighter, with Citibank trying to re-secure a strong foothold in the business. Citibank retail investment and consumer treasury director Harsya Prasetyo said that the bank expected to see a minimum of 15 percent growth in the wealth management business now that the Bank Indonesia (BI) sanction had been lifted.

In 2011, BI forbade Citibank from acquiring premium customers for a year following an embezzlement scandal involving one of its customer relationship managers, Malinda Dee.

Harsya said Citibank was excited to acquire new Citigold clients and that the bank was developing a new acquisition strategy, which would involve new products and new partnerships with new investment firms.

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