Is Mandarin the New Language of Private Banking?
The number of ultra-high net worth individuals (UHNW) with assets of $30 million and above in Asia has increased exponentially over the past three decades, more so than in any other area. In fact 42,895 UHNW individuals in the region have a combined net worth of approximately $6.3 trillion, according to Wealth-X.
With UHNW individuals so abundant in Chinese-speaking countries, many have begun to speculate about the likelihood of the wealth management language of choice shifting from the usual English or German (or Swiss-German), to Mandarin.
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Given the current financial crisis that left its mark on even the most astute of European economies, it is a real possibility. For instance, according to the International Monetary Fund (IMF), countries such as the United Kingdom, France and Germany have gross domestic product of $2.4 trillion, $2.6 trillion and $3.4 trillion, respectively, while China's is an impressive $8.2 trillion.
It is true that Chinese growth has been slowing and private banks have voiced their concern. Wealth-X points to a 2.1 percent decrease of UHNW Asian individuals since 2011; that is 915 individuals who missed the latest 2012/2013 rankings.
Moreover, the globalized 21st century has meant that UHNW individuals live between cosmopolitan, globalized cities, and tend not to remain in one country. This means that the likelihood of a single language of wealth management is very slim. So though Mandarin's use will increase amongst wealth managers, it is unlikely to be the most important future wealth language.
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This becomes apparent with a focus on the global cities that UHNW individuals hold in high esteem. English is still a predominant language. In the United States, New York and California are still UHNW hubs. According to Wealth-X, 10,955 and 8,595 UHNW individuals are currently based in California and New York, respectively.
This makes the number of UHNW individuals in China's global cities seem small in comparison, with 2,295 in Beijing and 1,435 in Shanghai. Combined with the fact that London, Sydney and Singapore (where English is more widely spoken than Chinese or Malay) are important destinations for the UHNW, suggests that English will still remain an important wealth management language in the future.
Portuguese and Arabic could also be wealth language contenders. For instance, according to Wealth-X, a steadily-growing Brazilian economy, coupled with a gradual increase in UHNW individuals to 4,640 in the country, has caught wealth managers' attention. Moreover, cities in the oil-rich United Arab Emirates (UAE), such as Dubai and Abu Dhabi, have also seen wealth managers using Arabic to facilitate private banking transactions.
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This comes as no surprise, given the fact that the UAE experienced a 4.5 percent expansion of its UHNW population in 2012, and that it acts as a springboard for wealth managers wishing to tap into other UHNW hubs in the Middle East, such as Saudi Arabia, Kuwait, Qatar and Israel.
Therefore, the Asian private banking system must initially establish itself before Mandarin becomes one of the customary 21st century wealth management languages.
Mandarin's future as a wealth management language beacon is optimistic, but it will not be the most important one. Arabic, Portuguese, Swiss and especially English will also play major roles in future wealth management communication in the 21st century.
Mykolas Rambus is CEO of Wealth-X, a research company that tracks the ultra high net worth individuals. Rambus is based in Singapore and was with Forbes magazine between 2007 and 2010.