By 2018, Asia-Pacific will be the world’s largest wealth management market, with US$61 trillion in assets — bigger than either the US or Europe — and growing at three times the rate of the rest of the world. By 2030, wealth in China alone will be similar to that of the US today.
But this growth bonanza won’t necessarily fall to incumbents. Each element of the wealth management value chain is being disrupted by new technologies, driving the sector’s transformation. The winners will be existing institutions and new players who harness the following disruptive technologies most effectively:
How can the industry make the most of wealth tech?
To make wealth tech solutions realize their potential in Asia-Pacific, the sector will need to:
Many local markets suffer from incumbent complacency. If a few big financial institutions control the majority of financial transactions, they may feel they don’t need to innovate to stay competitive. This is a false sense of security. Barriers to entry are falling and new players like Ant Financial are poised to move in.
On the back of legislation introduced since the global financial crisis, client identification and authentication has become very cumbersome. The industry will need to harness mobile security checks (retinal scans) and centralized authentication to make this process quick and easy for clients.
Right now, fund managers need to start using data analytics and artificial intelligence to support investment decision making. Perhaps, in the future, asset managers might be sporting virtual reality goggles to conduct executive interviews, review new products or undertake remote site visits without leaving their office.
By the time Asia-Pacific becomes the world’s largest wealth market, the sector will be fundamentally different. The investor experience will improve dramatically, with more convenient onboarding, better quality advice and access to more investment opportunities.
At the same time, advisors will become more effective and be able to fully align themselves with the best interest of their clients, the back office will become fully automated and trading functions will gain great efficiencies.
We are seeing a lot of hype around many of these developments. In reality, we expect steady evolution — not revolution — as it will take time to proof and embed technologies in business as usual.
However, the winners will be those who grasp the potential of wealth tech and start to innovate now.