The international asset and wealth management sector is on the brink of a technological transformation. A recent study that surveyed 264 asset managers and 257 institutional investors across 28 nations indicates that groundbreaking technologies such as artificial intelligence, blockchain, big data, and cloud computing are revolutionizing the industry. These advances are not only enhancing operational efficiency but also fueling innovation in products and services, opening new markets, and reconfiguring revenue models.
Indeed, 80% of the respondents claim that disruptive technologies are responsible for revenue increases, with tech-as-a-service potentially providing a 12% uplift by 2028. These transformative technologies are also enabling wealth managers to engage more closely with the promising mass-affluent market, which includes individuals with moderate levels of investable assets. A significant 72% of asset and wealth managers believe that these technologies will influence customer preferences, particularly among younger demographics who stand to gain from a $68 trillion intergenerational wealth transfer expected in the next decade.
However, the sector encounters a critical question: are companies advancing swiftly enough to seize these opportunities? Currently, 68% of asset and wealth managers direct less than one-sixth of their capital investments towards innovative technologies.
Technology reshaping wealth management
This raises an important dilemma for mid-sized firms that lack both the scale of larger entities and the specialized focus of boutique companies. To fully leverage the benefits of disruptive technologies, wealth management firms should concentrate on innovating their product offerings, engaging mass-affluent clients, establishing strategic alliances, enhancing workforce skills, and emphasizing cybersecurity. Moreover, the exploration of digital assets such as cryptocurrencies is gaining momentum, with 62% of firms intending to pursue these avenues in the next two to three years.
The adoption of cloud technology is another pivotal factor enabling broader technological integration. A notable 71% of asset managers are convinced that cloud infrastructure will significantly influence the industry’s future in the foreseeable future. The largest wealth management firms are already transitioning into technology and data-centric organizations, which is creating new value propositions and reinforcing their competitive significance.
With global assets under management anticipated to reach $171 trillion by 2028, the future landscape of asset and wealth management is set for major change. Organizations need to take proactive measures to remain competitive in this swiftly evolving environment by aligning with disruptive technologies, adapting, innovating, and capitalizing on new opportunities.
