80% of asset and wealth managers say AI will fuel revenue growth while ‘tech-as-a-service’ could see 12% boost to revenues by 2028, according to an update from PwC.
PwC also mentioned in its research study that almost three-fourths (73%) of asset and wealth management (AWM) organizations say AI is “seen as the most transformational technology over the next 2-3 years.”
PwC further noted in its research report that “81% are contemplating strategic partnerships, consolidations, or mergers and acquisitions (M&A) to enhance technological capabilities and build an ‘extended tech ecosystem.'”
As stated in the research study released by PwC, global assets under management (AUM) projected by PwC to hit “$171 trillion by 2028 at a 5.9% compound annual growth rate (CAGR), with alternatives to grow quicker – at 6.7% CAGR, to reach $27.6 trillion by 2028.”
AWM organizations look to tokenization to “democratize finance: PwC expects tokenised investment funds to surge to over $317 billion in 2028, at a 51% CAGR.”
Skills in high demand: 73% of asset managers considering M&A see “access to skilled expertise as the number one driver of deal-making over next 2-3 years, yet 30% say they lack relevant skills and talent.”
Four-fifths (80%) of asset and wealth management (AWM) organisations say disruptive technologies such as AI will “fuel revenue growth, with those moving quickly to adopt ‘tech-as-a-service’ potentially seeing a 12% boost to revenues by 2028, according to PwC analysis.”
PwC’s 2024 Asset & Wealth Management Report, surveyed “264 asset managers and 257 institutional investors from across 28 countries and territories, and also finds that four-fifths (81%) are contemplating strategic partnerships, consolidations, or mergers and acquisitions in order to enhance technological capabilities and build an ‘extended tech ecosystem’ to innovate, expand into new markets, and democratize access to investment products ahead of a great wealth transfer.”
The report also finds that global AUM held by AWM organizations around the world is projected by PwC to hit “$171 trillion by 2028, with tokenized investment funds to surge at a CAGR of 51%.”
AWM organizations broadly see disruptive technologies such as AI as transformational, with almost “three-fourths (73%) viewing it as the most transformative technology over the next two to three years.”
Notably, the research report pointed out that 80% say such technologies will fuel revenue growth, with 84% noting it will improve operational efficiency and 72% noting it will improve employee productivity.”
As stated in the report shared by PwC, the provision of tech-as-a-service1 by AMW organizations could “deliver a 12% boost to revenues by 2028, according to PwC analysis.”
While such technologies represent an opportunity to turbo-charge operations and access new markets, more than “three-fifths (68%) say that they allocate less than one-sixth of their capital to innovative and potentially transformative technologies, with more than half (59%) of institutional investors noting such technologies could reduce their reliance on asset managers.”
This comes as only 20% of AWM organizations are currently “using disruptive tech to enhance personalized investment advisory.”
Under baseline projections, PwC research estimates global assets AUM held by asset and wealth managers (AWMs) is “expected to hit US$171 trillion by 2028, reflecting a 5.9% CAGR, and up from 5% last year. Alternatives are projected to grow much faster – at a CAGR of 6.7%, to reach $27.6 trillion by 2028.”
As AWM organizations look to new growth opportunities, tokenization stands out, with tokenized products expected by PwC to “increase from $40 billion to over $317 billion in 2028, representing a 51% CAGR.”
Tokenization, or fractional ownership, could expand market offerings by democratizing finance and lowering premiums, “with tokenization planned to be offered notably by asset managers in private equity (53%), equity (46%), and hedge funds (44%).”
Although alternatives represent a significant growth opportunity, less than one-fifth (18%) currently “offer emerging asset classes such as digital assets as part of their offering – even as eight in ten that do offer such assets report a rise in inflows.”
As noted in the update, 30% of asset managers say they are currently “facing a lack of relevant skills and talent,” while 73% of AWM organisations who are exploring “M&A see access to skilled expertise as the number one driver for deal-making over the next 2-3 years.”
As AWM organizations contend with digital disruption and expanding their talent and product pools, “more than four-fifths (81%) are contemplating strategic partnerships, consolidations, or mergers and acquisitions to build an extended tech ecosystem to drive growth.”
PwC’s 2024 Asset & Wealth Management Report is an international “survey of 264 asset managers and 257 institutional investors from across 28 countries and territories.”
Respondents covered a spectrum of AUM size, with “more than half boasting assets of over $10 billion.”
