- Nearly 73% of asset and wealth management (AWM) organisations see AI as the most transformational technology for the next 2–3 years.
- 81% are exploring partnerships, consolidations, or M&A to build ‘extended tech ecosystems’.
- Global assets under management (AUM) projected to reach US$171 trillion by 2028, with alternatives growing faster at 6.7% CAGR.
- Tokenised products are set to surge to US$317 billion by 2028 at an impressive 51% CAGR.
- 73% of asset managers pursuing M&A cite access to skilled talent as a priority, despite 30% reporting a skills shortage.
Singapore, 22 November 2024 – A vast majority (80%) of asset and wealth management (AWM) organisations believe disruptive technologies like artificial intelligence (AI) will drive revenue growth, with firms adopting ‘tech-as-a-service’ models potentially reaping a 12% revenue increase by 2028, according to PwC’s 2024 Asset & Wealth Management Report.
The report, launched on 19 November 2024, surveyed 264 asset managers and 257 institutional investors across 29 countries and territories. It reveals that over four-fifths (81%) of AWM organisations are exploring strategic partnerships, consolidations, or mergers and acquisitions (M&A) to enhance technological capabilities, foster innovation, and broaden market reach. These strategies are seen as critical ahead of the anticipated generational wealth transfer that will reshape client expectations and investment services.
PwC projects that global AUM will reach US$171 trillion by 2028, driven by a 5.9% compound annual growth rate (CAGR), with tokenised assets growing even faster.
Albertha Charles, Global Asset & Wealth Management Leader at PwC UK, commented, “Disruptive technologies like AI are revolutionising the AWM industry, boosting revenue growth, productivity, and efficiency. Many organisations are now looking at strategic consolidations and partnerships to build tech ecosystems, dismantle data silos, and adapt their services for younger, more digitally savvy investors. Success in this digital-first market hinges on investing in technology and equipping teams with the digital skills necessary to stay competitive and innovative.”
AI to Transform AWM Operations and Revenue
AI is seen as the most transformative technology by nearly three-fourths (73%) of AWM organisations over the next 2-3 years. Four-fifths (80%) expect AI and similar technologies to drive revenue growth, while 84% believe these innovations will enhance operational efficiency and 72% see improved employee productivity. The adoption of tech-as-a-service could contribute to a 12% revenue uplift by 2028.
However, the report highlights a mismatch between potential and investment. Over two-thirds (68%) of organisations allocate less than one-sixth of their capital to transformative technologies. Meanwhile, 59% of institutional investors believe such technologies could reduce reliance on asset managers. Only 20% of AWM firms currently use disruptive tech for personalised investment advisory.
Global AUM and Alternatives to Witness Significant Growth
Global AUM is expected to climb to US$171 trillion by 2028, with a 5.9% CAGR. Alternatives, such as hedge funds and private equity, are projected to grow even faster, at 6.7% CAGR, reaching US$27.6 trillion.
Tokenisation is a standout opportunity, with PwC forecasting tokenised products to soar from US$40 billion in 2024 to over US$317 billion by 2028, representing a 51% CAGR. Tokenisation allows for fractional ownership of assets, democratising finance by lowering premiums and making alternative investments more accessible. Despite this growth, fewer than 18% of AWM organisations currently offer digital assets. Those that do, however, report increasing inflows.
Focus on Talent and Tech Ecosystems to Navigate Disruption
Talent remains a critical concern for AWM organisations. While 73% of those considering M&A cite access to skilled expertise as the primary driver of deal-making, 30% of asset managers report a shortage of relevant skills. To overcome these challenges, 81% of organisations are exploring M&A, partnerships, and consolidations to create extended tech ecosystems.
Paul Pak, Asia Pacific and Singapore Asset and Wealth Management Leader at PwC, said, “This year’s report highlights the urgency for AWM firms to reimagine their value propositions. Megatrends like technological disruption and demographic shifts are reshaping how financial services are consumed. Success will depend on continuously innovating to deliver value at speed and scale.”
“Asia Pacific stands out as a high-growth region, driven by a rising middle class, rapid economic expansion, and increasing wealth opportunities. The region’s swift digital adoption and innovation in areas like tokenisation and digital assets will accelerate the convergence of public and private markets, enabling greater personalisation and expanding access to investment solutions.”
Pak further emphasised the importance of strategic partnerships: “Collaborations and consolidations are pivotal for creating tech ecosystems that drive innovation, especially for smaller firms needing to modernise quickly and cost-effectively. Meanwhile, larger players gain access to talent and insights essential for growth, particularly as AI and emerging technologies reshape investment management.”
Conclusion
The findings of PwC’s report underscore a critical moment of transformation for the asset and wealth management industry. Disruptive technologies, particularly AI, offer unparalleled opportunities for growth, innovation, and personalisation. To succeed, AWM organisations must invest in advanced technologies, address skills gaps, and leverage strategic partnerships to build ecosystems capable of meeting evolving client expectations and thriving in a rapidly changing market.
