Kotak Private Bank is open to foreign collaborations provided visions align, says Kotak Private Bank CEO Oisharya Das

Several foreign companies have recently expressed interest in India's wealth management sector. Kotak Mahindra Bank also, I believe, relies heavily on Foreign Institutional Investors (FIIs), with nearly 50 percent of its backing from them. How does Kotak Private perceive this increasing foreign attention, and what opportunities or challenges does it pose for your operations? Does Kotak Private have any intentions to pursue strategic partnerships or collaborations with international firms?

With the wealth creation that we are seeing across markets, there is enough and more opportunity for players in this segment including MNCs. As far as strategic partnerships go with foreign players, if there is a synergy, value addition, and a match of culture, we will definitely evaluate such partnerships.

Recent entrants in the wealth management space are targeting a broader segment with deposit averages of 25-50 lakh. How does Kotak Private plan to compete with these firms while maintaining its focus on the top 1 percent? How does it plan on expanding its AUM? Do you see potential in adapting your model to capture this mid-tier market which is supposedly growing right now?

Kotak Private targets clients with $1 million and above, and will continue to focus on this high-value segment. The affluent segment which you are referring to is a huge opportunity which the broader bank is addressing with a unique proposition. We are expanding into tier-2 and tier-3 markets, sharpening our segmentation on professionals, and leveraging group synergies. Our growing global footprint also fuels this scale, all while preserving value. Moreover, the opportunity is immense with India’s UHNI population expected to grow from 2.83 lakh to 4.3 lakh, which is a 52 percent increase. There is massive, massive potential for private banks like us to capitalise on.

Speaking of tier-2 and tier-3 cities, the report highlights the growth these areas. How does Kotak Private intend to capitalise on this market, and what is the current number of clients you serve from these regions?

So, equity investments have traditionally been concentrated in Mumbai, Gujarat and other metros with tier 2 and tier 3 cities leaning towards gold, real estate and mutual funds. However, we are now seeing a shift. In states like UP, Bihar, and southern states like Andhra Pradesh and Telangana, where wealth was once tied up largely in real estate, there is cashing out of physical assets and turning to financial instruments. The tier-2 and tier-3 markets offer huge potential, as they’re underbanked compared to metros.

The report, of course, mentioned changes in investment and spending behaviour across generations. Are there also differences in client behaviour between metro cities and tier-2 or tier-3 cities, or is it largely similar?

Currently, we are present in 50 cities some are manned locations like Baroda, Lucknow, Indore, Cochin, Coimbatore, as well as unmanned ones where we are actively tapping into investment opportunities. The bank’s robust distribution network aids this expansion, acquiring clients both digitally and physically through branches. Potential customers identified on the ground are seamlessly transitioned upward to Kotak Private. We expect these markets to grow to 25-30 percent of our client base over time.

So, which segment seems most attractive to UHNIs and NHIs amongst all?

As the report suggests, around 30 percent of wealth is in listed equities, and equity remains dominant. For UHNIs, the split is roughly 30 percent in equities and 30 percent in real estate, totalling 60 percent in these asset classes. At the lower end, below affluent levels, 90 percent of wealth is typically in fixed deposits (FDs), gold, housing, or other real assets, with some exposure to mutual funds and insurance.

As you move up the wealth curve, risk appetite and holding capacity increase. UHNIs favour equities and riskier assets due to their ability to weather volatility, while lower segments prefer safer asset classes.