The global asset management industry is undergoing a profound transformation, driven by structural shifts and technological advancements.
Two recent reports from Citi provide critical insights into these changes.
These updates, based on research and industry expertise, outline the challenges and opportunities shaping the future of finance, from evolving business models to the integration of digital assets.
Citi’s Rebooting the Global Asset Management Industry report, developed in collaboration with CREATE-Research, highlights the seismic shifts reshaping the $37.7 trillion asset management sector.
Drawing on insights from 269 asset managers across 26 markets and 30 executive interviews, the report identifies key challenges and emerging opportunities.
Over half of the respondents cited increasing inflows to mega players, the rise of passive funds, fee compression, and rising operational costs as primary hurdles.
These pressures are forcing asset managers to rethink traditional business models to remain competitive.
The report underscores a pivotal moment for the industry, driven by a generational wealth transfer from Baby Boomers and the need to adapt to digital and data-driven solutions.
Chris Cox, Global Head of Investor Services at Citi, emphasizes the importance of future-proofing businesses by leveraging technology to capture new growth opportunities.
Citi Investor Services, encompassing Custody, Fund Services, and Execution Services, is investing heavily in data and digital solutions to support clients through this transition.
Professor Amin Rajan, CEO of CREATE-Research, notes that the industry has a “once-in-a-lifetime opportunity” to create enduring value by aligning with these shifts, particularly through innovative operational models that prioritize efficiency and client-centricity.
The report also highlights the growing dominance of mega players, as economies of scale drive consolidation.
Passive funds, with their lower fees, continue to gain market share, putting pressure on active managers to demonstrate value.
Meanwhile, rising costs and regulatory complexities are pushing firms to streamline operations and adopt technology-driven solutions.
The future, according to the report, lies in business models that balance scale, innovation, and personalized offerings to meet evolving investor demands.
In parallel, Citi’s Digital Assets: Mapping Applications for the Enterprise report explores how blockchain and digital asset technologies are revolutionizing financial services.
The report details Citi’s advancements in tokenization and blockchain-based solutions, particularly through its Citi Token Services, which leverage smart contracts to enhance cash management and trade finance.
By integrating tokenized cash into Citi’s global network, the service enables instantaneous, 24/7 cross-border transfers, with live corridors in USD between Singapore and the US.
Clients can initiate payments without needing wallets or owning blockchain nodes, simplifying adoption.
The report also showcases Citi’s collaborative efforts with partners like T. Rowe Price, Fidelity International, Wellington Management, and WisdomTree to explore tokenization in private markets.
These initiatives demonstrate how blockchain can enhance liquidity, transparency, and efficiency for institutional clients.
For instance, Citi’s tests with simulated bilateral trades using blockchain infrastructure highlight the potential to streamline pricing and execution processes.
Puneet Singhvi, speaking at CNBC Crypto World, emphasized the growing institutional interest in digital assets, driven by distributed ledger technology’s ability to modernize legacy systems.
Stablecoins, pegged to assets like the US dollar, are another focal point.
Citi’s research projects the stablecoin market could reach $1.6 trillion by 2030 in a baseline scenario, with optimistic estimates at $3.7 trillion.
Regulatory clarity and integration with existing financial systems are critical to this growth, enabling banks and enterprises to adopt stablecoins for retail and wholesale applications.
The report also explores agentic AI, which autonomously manages financial processes, and the potential for AI-driven robots to transform markets, with estimates of 1.3 billion AI-robots by 2035.
Together, these reports paint a picture of an industry at a crossroads.
Asset managers must navigate consolidation, fee pressures, and technological disruption while capitalizing on opportunities like wealth transfers and digital innovation.
Citi’s leadership in both traditional asset management and digital assets positions it to guide clients through this era of change.
By investing in blockchain, tokenization, and data solutions, Citi is not only addressing today’s challenges but also shaping the financial landscape of tomorrow.