Banks recognise a different kind of approach is needed when dealing with customers from the mainland, writes P. Ramakrishnan
The establishment four years ago of the Closer Economic Partnership Arrangement (Cepa) between the mainland and Hong Kong has led to a boost in the number of tourists crossing the border during "golden weeks" - a time of big spending. In that time, local retail banks have been studying their mainland clients and learning about their investment thinking and habits.
One characteristic senior bankers have noticed is their eagerness for quick results. Mainlanders tend to expect Hong Kong to deliver the kind of high, fast returns they've enjoyed back in the boom towns of China.
"In the China market, there has been a wave of clients making aggressive investments, and making money as well," said Stanley Wong, director and deputy general manager at ICBC (Asia).
"To replicate that in Hong Kong is difficult. Hong Kong is a much more regulated market. When they want to see instant returns, dramatic results, we have to explain to them the rules and regulations."
Often, mainland clients demand more than Hong Kong retail banks are in a position to give.
"Mainland customers very often require frontline staff to give them investment ideas. In Hong Kong, where restrictions are tight, our staff can provide information, but not trading ideas.
"The customer demands trading ideas, but we are only permitted to give objective information," he said.
Mr Wong believes Hong Kong banks would do well to train frontline staff hired in the mainland and brought over to serve their mainland client segment.
"For example, frontline staff recruited in Guangdong would naturally be able to serve mainland customers with efficiency and fluency. We provide training so our frontline staff understand the two markets, China and Hong Kong.
"And fluency in Putonghua is key to effectively serving mainland customers. There can be no room for miscommunication when dealing in large sums, or any sum of money for that matter."
Despite seasonal fluctuations in tourist numbers, Mr Wong foresees no abatement in the flow of mainlanders coming to Hong Kong to set up offshore accounts.
"In fact, I think there'll be an increase in numbers, as regulators in China allow mainlanders to invest in the Hong Kong stock exchange. Increasingly, China will be a source of customers and business.
"All banks must be prepared to meet the needs of the influx of mainland customers."
At Citic Ka Wah Bank, staff are trained to advise mainland clients; often, this entails tactfully reminding them of the letter of the law. "It is important to respect what mainland clients want," said Phoebe Wong, senior vice-president and head of wealth management and strategic planning at Citic Ka Wah Bank.
"They need an education in what is best for their portfolio.
"We have had to take a gradual approach, matching products to client needs, instead of bombarding clients with facts and figures."
Language and the personal touch are crucial in the delicate bank-client relationship.
Ms Wong said language skills and mutual respect were essential for a good understanding of the customer. "We need to gauge their understanding of the market and give sincere, accurate advice."
Ms Wong said the bank's employees were well accustomed to dealing with mainland clients, and some could even recognise them the moment they walked into the bank. It was not unusual to see certain customers carrying large wads of cash in plastic bags, and more often than not they hailed from the mainland.
In general, the mainland client is not as market savvy and sophisticated as his Hong Kong counterpart.
Ms Wong described a typical mainland portfolio: "First, mainlanders tend to have most of their investments tied up in real estate. Their wealth is growing fast, but their portfolio isn't sophisticated or complex. When it comes to stocks and trading, it is all very speculative.
"When I see a relatively simple portfolio, with 60 per cent of it still in cash, I can guess that this is new money from the mainland," Ms Wong said.
Why this keen interest among mainlanders enjoying sudden increases in personal wealth to channel money to banks across the border?
"There are many fine and trustworthy banks in China, so why should they come to Hong Kong to invest? Because of the level of service Hong Kong provides. They respect the way their money is managed.
"It is the attention to detail, the follow-up service - following through to the end, the financial planning. That's missing in other places, but they find it here in Hong Kong.
"They appreciate the holistic approach to wealth management," Ms Wong said.
From South China Morning Post S09 Banking & Finance Crossborder banking