Investec has set out a private client growth strategy built around what it calls a “high-touch, advice-led” proposition, backed by digital banking, wealth management and 24/7 client support. In South Africa, Investec wants to grow from 128,000 private banking clients to about 250,000 by 2030, adding roughly R3-billion in operating profit. In the UK, it plans to add about 5,000 private banking clients and contribute an additional £25-million in operating profit.
The strategy is less about launching a new business line than squeezing more value from a franchise that already contributes about a third of group operating profit. Investec’s Private Client business reported an 18% return on equity and a 52.1% cost-to-income ratio, according to a presentation shared with media late last week.
For South Africa, the main prize is the affluent market – people earning between R800,000 and R1.5-million a year. Investec estimates there are about 700,000 people in this band, but its current market share is only about 7%, compared with about 25% in the high-income segment and 41% among high-net-worth clients.
Investec has served affluent clients before, but historically did so through specific professions such as chartered accountants, actuaries, legal professionals and medical specialists.
“Our ability to turbocharge in that market has been through the investments we’ve made on our digital platforms, which ensures that from a cost-to-serve perspective we can do it at the right level,” Itumeleng Merafe, head of Private Banking SA, told journalists at a media roundtable last week.
He said the growth push was no longer based only on banking.
/file/attachments/orphans/ItumelengMerafe_288714.jpg "Itumeleng Merafe, head of Private Banking SA. (Photo: Supplied)")
Investec is using My Investments and Investec Life to widen the entry points into its ecosystem. Merafe said the My Investments platform allows the bank to bring elements of its wealth offering into the affluent market, while Investec Life gives it another route to acquire clients and deepen existing relationships.
“A lot of these clients in the affluent sector are not looking for just another transactional platform, but are looking for a holistic financial services partner, and we will be advice-led in dealing with these clients,” he said.
The group is also trying to blur the old lines between banking and wealth. Investec CEO Fani Titi said: “The Private Client franchise sits at the heart of Investec. Our origins are rooted in client service and enabling our clients to achieve more.”
He said Investec’s “One Investec” approach brings banking and wealth “together into a seamless, client-centred experience”.
The risk, of course, is that “advice-led” can become banker-speak for selling more products to the same client. Asked how Investec would prove better client outcomes rather than merely driving a higher share of wallet, Ryan Tholet, head of Private Banking UK, said the model was “not a product push”.
“What relationship and holistic advice provides is deep, long, tenured relationship, which gives us opportunity over the life cycle of clients to deliver more to them,” Tholet said.
/file/attachments/orphans/RyanTholet_SQ_272707.jpg "Ryan Tholet, head of Private Banking UK. (Photo: Supplied)")
Merafe added that South Africa was not testing the theory from scratch. He said Investec had already seen the clearest success in the segment where banking and wealth had long worked closely together.
“In the high-net-worth segment, where we have for a very long time had high-net-worth bankers and wealth managers working very closely together and have been advice-led, we’ve been able to gain and maintain significant market share,” he said. “It’s not theoretical for us.”
Internationally, Investec is also changing the way it works with Rathbones, moving from referrals to what it describes as an integrated assets-under-advice model. Investec will lead the client relationship and advice, while Rathbones and Investec Wealth & Investment International provide investment capabilities.
The group is not planning an immediate change to its roughly 41% stake in Rathbones. Titi told journalists that the stake remained strategic and that Investec would be the anchor shareholder until September 2028 under existing arrangements.
In a nutshell, Investec wants to keep its private bank cachet while reaching deeper into the market below the ultra-wealthy. The challenge will be doing that without making its zebra-striped franchise feel less rare. DM
