RESEARCH REPORT
Reinventing Asia’s wealth management with AI
Asia’s wealth management is at a major turning point where gen AI could help the industry’s firms reach their ambitious growth goals.
3-MINUTE READ
July 25, 2024
In brief
- Asia’s wealth managers have ambitious plans to double assets under management by 2026, expecting relationship managers to deliver 90% of that uplift.
- While gen AI may not be the one solution to fix it all, it could help deliver revenue gains worth hundreds of millions of US dollars to wealth firms.
- With gen AI, firms can enhance their investment content, turning generic updates into personalized insights thus driving client action and loyalty.
Gen AI in wealth management: A paradigm shift
Gen AI is poised to revolutionize wealth management. While CXOs and relationship managers (RMs) differ on what use cases might be the ones to prioritize for wealth management in Asia according to our research, they both agree that the potential for revenue gains and cost reductions can be significant. Our analysis of six key use cases revealed a potential profit uplift for a hypothetical wealth firm of US$606M over three years, with an additional US$211M from cost avoidance or reductions due to productivity gains.
US$817M
worth of profit gains projected over three years for a hypothetical wealth firm utilizing gen AI.
50%
of Asian investors in our survey admit that they do not get relevant and personalized content.
42%
of relationship managers cannot track engagement rates on shared content and campaigns to generate targeted follow-ups.
A game changer for better client relationships
Not only can gen AI bring internal efficiencies, it also has the potential to radically transform the relationship between RMs and clients. By automating time-consuming tasks, RMs could focus on activities that add value, such as personalizing client interactions and developing tailored investment strategies.
Although nine in ten CXOs and RMs are excited about the impact gen AI could have, as are nearly two-thirds of their clients, our research shows they disagree about where in the end-to-end client journey it would be best deployed.
Where CXOs and RMs most closely align is in how gen AI could improve execution and service-related support, thus boosting efficiency and productivity while disseminating more relevant investment-related content.
We see gen AI has been a transformative force reshaping wealth management. By integrating gen AI across the end-to-end client journey, firms can unlock unprecedented productivity and revenue opportunities.
David Wilson / Managing Director – Wealth Management Lead, Growth Markets
The art of personalized investment content
This year’s research adds another client bugbear that firms can and should address: the quality and relevance of their investment content.
Investment content is a crucial touchpoint for wealth management firms, yet client satisfaction remains low. Our research found that nearly half of investors are dissatisfied with the relevance and frequency of content they receive. Almost half of clients do not get personalized content and thirty-seven percent say firms do not send it regularly. As a result, clients only open two percent of the investment content they receive because much of it, they say, is generic, lacks relevance and is delivered sporadically.
By leveraging gen AI and data analytics, firms can create personalized, targeted content that better meets the needs of their clients. This not only enhances client engagement, but also has the potential to drive revenue growth. Our calculations show that firms could boost top-line revenue by up to eight percent annually through improved investment content.
Is your firm an Observer, an Experimenter or a Scaler with gen AI?
But where are firms today? When it comes to gen AI, most wealth management firms in Asia are in the “observe” and “experiment” stages according to our research. Although overall progress is slower than one might expect, it is encouraging that none classify themselves as Uninterested.
Ultimately, the goal is for firms to move past the ad-hoc piloting stage that currently seems to dominate the gen AI projects landscape to invest in the infrastructure and operating model that leverages gen AI at scale across markets, business units along the entire value chain in a responsible way. Firms that do this would not only be best placed to meet their ambitious AUM and revenue growth targets but be well on their way to becoming Scalers in the gen AI space.
Explore all of this and more in our latest Thought Leadership report on Wealth Management in Asia, Smart money: How harnessing generative AI can deliver transformational profit growth here.
Asia is the key wealth management battleground. The expansion of wealth management in Asia is being driven by powerful factors. The Asia-Pacific region (APAC) is already the largest wealth region globally, with the wealthy comprising a growing percentage of the overall population. It is also a highly dynamic economy in which innovation is increasingly widespread.
Wealth Management firms have exceedingly ambitious growth goals to double AUM to US$140bn by 2026. Although they will likely enjoy a supportive macro-economic environment, it will not be enough to meet those goals. Firms need to improve the client experience by revamping the digital channel, including focusing on a better mobile app, and re-envisioning the RM role. GenAI is the latest—and, in our view, the most significant—of the slew of disruptive technologies that has emerged over the past decade, and it is clear it will play a profound role in the wealth management industry in the years to come.
The wealth management space is at a turning point, as GenAI becomes far more powerful and part of the mainstream. Wealth management firms need to craft a GenAI strategy and implement it or risk being left behind. While GenAI is no silver bullet, it is different to previous technological advances, providing unparalleled efficiencies, insights and the ability to learn—and, as we demonstrate in the report, it can deliver revenue gains worth hundreds of millions of US dollars to individual wealth firms.