Citi has expressed optimism that the number of Filipinos belonging to the “emerging affluent” segment—composed of people with assets between $10,000 and $100,000—will grow by 10-12 percent every year over the medium term.
The international financial institution said this trend poses a good opportunity for it to grow its business in the Philippines by marketing new financial services that cater to the “nearly rich.”
In a briefing Thursday, Citi launched its new financial services program targeting the emerging affluent sector.
These include designation of personal bankers for their clients; more sophisticated mobile, Internet and phone banking; and personalized wealth management services.
“There is a huge number of people [in the Philippines] who will move to the emerging affluent segment, and so we want to be ahead of the game,” Daniel Baranowski, head of Citi’s emerging affluent group for Asia, said Thursday.
Citi estimates that there are 5 million Filipinos belonging to the emerging affluent segment, or less than 5 percent of the population.
But even at this level, he said the number was already attractive enough for Citi to invest in the new set of financial services.
According to Baranowski, the number of Filipinos belonging to the emerging affluent sector will grow by between 10 and 12 percent every year over the medium term.
“There are ‘mega-trends’ in the Philippines that make it attractive for Citi [to invest in more financial services]. These include rising urbanization and demand for goods and services, as well as an economy that is growing by 4 to 5 percent a year,” Baranowski said.
“We estimate that the number of people in the emerging market segment will grow twice as much as the growth of the economy,” he added.
Baranowski also said the Philippine economy’s sustained growth, even at the height of global economic challenges, makes the country attractive for banking business.
Over the past decade, the Philippines has posted an average growth of nearly 5 percent.
“We see the Philippines as a good market,” Baranowski said.
Citi expects the country’s growth to outpace that of the industrialized economies, which are currently growing by only 2 percent.
Baranowski said the rapid urbanization in the country is likewise a come-on for banks since this indicates a growing demand for financial services.
The new set of financial services that Citi launched in the Philippines Thursday was also launched in other selected Asian markets such as Taiwan, China, Singapore and Hong Kong.
Citi said the new set of financial services for the emerging affluent segment will also be launched in four to five more emerging markets in Asia, which is expected to continue driving growth of the global economy over the medium term as industrialized nations are struggling with debt woes.
Individuals who belong to the emerging affluent segment, besides earning between $10,000 and $100,000, are also described as employed, mobile (travel frequently), Internet savvy, and keen on having a financial plan.
A survey conducted by Citi among emerging markets in Asia, including the Philippines, showed that people in the emerging affluent segment want more personalized and sophisticated services from their banks.
Citi said this is why the bank had decided to enhance its financial services, as it targets to boost income by tapping new markets such as the emerging affluent sector.