In a bid to woo the wealthy in an increasingly competitive market space, more banks are cultivating tie-ups with luxury concierge firms. Citi Hong Kong this week became the latest to announce a partnership.

In a bid to woo the wealthy in an
increasingly competitive market space, more banks are cultivating tie-ups with luxury concierge
firms. Citi Hong Kong this week became the latest to
announce a partnership.

The US bank has engaged the services
of luxury concierge company Ten Group, to cater to its affluent credit card
holders in Hong Kong. Hong Kong-based clients of Citibank’s Ultima credit card will
get access to unlimited concierge services for free at any time of day or night
– which include anything from restaurant bookings to travel arrangements. 

The announcement comes
after a report published in December revealed a widening rift in trust and
communication between Asian high net worth individuals and their wealth managers
– underlined by the difference in opinion over concierge services.

In the survey Value of
Trust published by Singapore-based Bruce Weatherill Executive Consulting,
while 43 per cent of Singaporean clients and 22 per cent of global clients
rated access to concierge and card services as a top reason for choosing a
wealth manager, not a single wealth manager thought these services were
important. 

But as margins grow thinner, the global economy flounders and differentiation becomes increasingly
difficult between banks, a number of banking firms have signed up to Ten’s services in
recent months. These include UK lenders Barclays, Lloyds, RBS Group, and Switzerland’s
UBS.

A competitive edge

Ten chief executive Alex Cheatle agrees that the firm’s
success partly lies in being in the right place at the right time. Banks are
increasingly looking for external concierge services to woo rich clients,
particularly in Asia where the millionaire population now outnumbers Europe –
and is still growing fast. While private individuals may be cutting back on discretionary costs, ninety-five per cent of Ten's business is now corporate, a part of the market which is going from strength to strength, he said. “Concierge
is a valuable customer loyalty benefit which is proven to work for
international finance brands."

However, he adds, Ten’s customer
service has also helped it grow through recommendations. “Ten created
the blue print in lifestyle management, having first started out in 1998.
We have market-leading staff retention, far ahead of competition. We value our lifestyle managers for their expertise and it helps to
have people who really get to know our members over time. Our clients expect first
rate service and second-to-none local knowledge,” he added.

To test Ten’s aptitude, Citi made a number of timed trial
requests including sourcing a luxury handbag only available in Europe, and an
urgent recommendation for an allergy-catering restaurant in Taipei.

The service will be 24/7 and provided in English, Cantonese and
Mandarin. Members of the service based in Hong Kong will benefit from the
connections and expertise of Ten’s lifestyle managers in Hong Kong and, if
required, any of its other offices worldwide.

Sustainable growth?

But Ten is far from alone in the market. International SOS, Mondial and AXA Assistance already occupy a substantial share of the corporate market in Asia. Other concierge firms are entering the region, eager for a slice of the pie. Quintessentially, the concierge launched in London’s trendy Soho eleven years ago, recently relocated its chief executive to Hong Kong in a bid to grow market share. It, too, has a number of corporate licenses with banks, although it would not disclose them to WealthBriefingAsia.

Fiona Foxon, Hong Kong manager for Quintessentially, said the firm has witnessed "incredible growth in the demand for corporate and VIP client retention programs. This is now a cornerstone of our Quintessentially corporate membership offering".

"Over the past five years, the landscape in Hong Kong has changed, in particular, within the financial sector. The industry is all about relationships, and as their clients have grown more demanding of bankers, bankers and their support teams need trusted advice, access and insights, available 24/7, 365 days a year. We very simply become an extension of their internal teams to deliver our world-class concierge service focused entirely on their key clients," added Foxon.

Competitors say that Ten’s rapid expansion rate means that the
ratio of members to lifestyle managers cannot possibly equate. Ten has over 1
million private individuals on its books on behalf of around 70 firms, but
employs just 350 to cater to them. It says it receives “35,000 complex
lifestyle requests per month” – working out as over 25 per week per member of
staff.

Mindful of this imbalance, over the next 12 months Ten wants to
increase employee numbers by a quarter and to open new offices in Sao Paulo,
Mexico City, Tokyo, Singapore and Shanghai. The firm currently has offices in
London, New York, San Francisco, Miami and Hong Kong.

One thing in favour of concierges are their value-for-money fees, compared with, say a full time personal assistant. An individual Ten membership costs around $5,400 for a personal lifestyle manager, while Quintessentially charges from HK40,000 ($5,100) in annual
membership, though this can soar to an eye-watering HK300,000 for individual elite membership. The current climate could see more individuals cut back on PAs, instead using their concierge membership from their bank to book tables, travel and appointments. 

And if a bank can afford it, why not? Although neither firm breaks down individual corporate membership rates, a single request costs in the region of $75 to execute. A network like American Express will tell you that its iconic invite-only Centurion Card, often referred to as the Amex Black, garners interest from a lot of new customers. In an industry were margins are growing thinner and thinner, anything that helps increase new assets should be of interest to banks. Said Foxon: "Clients are happy, banks are happy; everyone wins."