According to consultancy Knight Frank’s recent Wealth Report, the number of ultra-high net worth individuals (UNHWIs) in the Middle East increased by 6.2% in 2023. Globally, this number is expected to rise by 28.1% by 2028. Private banking services are already in high demand in the Middle East, and these latest statistics underscore the importance of ensuring such services meet the unique needs of this discerning group of clients. Vipul Kapur writes

Sector development in recent years

We have seen notable growth and transformation in private banking across the region in recent years. Demand for sophisticated wealth management services – including diversification of investments across geographies and asset classes – has grown, and global private banks have been expanding their presence alongside established local players. A clear focus on relationship management, with private banks emphasising personalised relationship management and providing bespoke services, continues to be a key differentiator.

With many countries in the region actively pursuing economic diversification away from oil dependence, investing in sectors such as tourism, technology and finance, new wealth and investment opportunities have arisen for private banking.

Regulatory frameworks are evolving to align with international benchmarking and standards, enhancing transparency and investor confidence.

The unique needs of private banking clients in the Middle East

Given the global nature of wealth and business activities in the region, private clients here expect cross-border banking services, including international investment opportunities, multi-currency accounts and offshore wealth management solutions.

Middle Eastern clients prioritise strategies that preserve and grow their wealth over the long term, and tend to diversify their portfolios to mitigate risk and generate stable returns. We see a focus on real estate equities and alternative investments. Beyond traditional wealth management, there is demand for specialised services such as philanthropy, succession planning and family governance, with private banks catering to the complex needs of wealthy families.

Leveraging the latest in technology and innovation

Young, tech-savvy clients have driven a shift towards digital banking and wealth management solutions, and their expectations of seamless digital experiences, the utmost efficiency and total convenience have prompted banks to invest in cutting-edge technology to improve service delivery and client interaction and offer innovative investment solutions.

By leveraging technological advancements, data analytics and digital platforms, private banks have been able to access specialised expertise, benefit from enhanced market insights and optimise investment outcomes, enhancing their management efficiency and client communication.

Cyber security has also been a key priority, with banks investing in advanced cyber security solutions such as encryption technologies, multi-factor authentication, biometric identification and continuous monitoring to protect client assets and information.

The impact of global economic shifts

Of course, the Middle East is not immune to impact from global economic shifts, and such shifts can have profound implications for private banking in the region that can influence investment strategies, risk management approaches and regulatory compliance. Changes in global interest rates and monetary policy decisions by major central banks, such as the US Federal Reserve, influence capital flows and investment strategies, affecting borrowing costs, investment returns and asset allocation decisions for HNWIs and UHNWIs.

Regulatory developments such as tax reforms and financial regulations and geo-political events and regional conflicts can also impact investor confidence, economic stability and market volatility in the Middle East as in any other region across the world.

Strategies for success

Strong, personalised relationships are crucial. Across the region, it is important for private banks to host exclusive events and seminars and offer networking opportunities for their clients, fostering solid relationships and enhancing loyalty. Clients in the Middle East expect innovative, transparent fee structures and value propositions, and banks have the opportunity to demonstrate their commitment to their clients and differentiate themselves through superior service and performance and entirely tailored solutions.

Looking to the future

We expect the adoption of digital technologies to continue to accelerate, with private banks enhancing their digital platforms for client interaction, wealth management and operational efficiency.

In alignment with other industries, we anticipate a growing emphasis on environmental, social and governance (ESG) criteria in investment decisions. Sustainable and responsible investment options will expand to meet the preferences of socially conscious clients.

And as wealth transfers to the next generation, we expect this to prompt increased demand for estate planning, family governance and succession advisory services. Private banks will have the opportunity to play a crucial role in facilitating smooth transitions and the preservation of family wealth across generations, continuing the solid relationships on which private banking in the region has been built.

Vipul Kapuris the Managing Director & Head of Private Banking at Mashreq