Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
WealthTech in Asia-Pacific: A Trillion-Dollar Opportunity
McKinsey & Company Report | Oct 30, 2023
McKinsey & Company on the WealthTech Revolution in Asia-Pacific, A Trillion-Dollar Opportunity
- The Asia-Pacific wealth management market is brimming with potential, estimated to reach $81 trillion in onshore personal financial assets (PFA) by 2027, propelled by technological innovations and shifts in customer behavior.
- This translates to a staggering $1 trillion in revenue pools across the wealth continuum.
- The affluent segment is highlighted for its growth potential, with a projected CAGR of 8% from 2022 to 2027, and a wealth management penetration rate expected to increase from 15-20% to 22-27% during the same period.
See: The future of Asia: Asian flows and networks are defining the next phase of globalization
- The WealthTech sector is rapidly gaining traction with 40-45% of PFA in the region held in cash and deposits.
- Broadening access to wealth management services, especially for the untapped and underserved segments.
- The industry is moving towards providing "advice for all," enabling a wider range of customers to benefit from financial advice and investment opportunities.
- The future of wealth management in the region is expected to be dominated by digital-hybrid platforms, providing flexible and on-demand advisory services, driving a shift away from the traditional high-touch, relationship manager models.
- The report highlights the need for personalization at scale and emphasizes the importance of investor education to empower individuals to make informed financial decisions.
3 Primary Ways To Serve Customers
1. User-Friendly WealthTech Platforms (Direct-to-Consumer)
These digital platforms are easy to use and offer a variety of assets for trading, both public and private. Customers can get financial advice through online channels, either completely digital or a mix of online and in-person services. This type of WealthTech makes financial advice accessible to a wider range of customers, from everyday people to the wealthy, and provides more online interaction options for high-net-worth individuals.
- Wealthsimple: Based in Toronto, Wealthsimple is a popular digital investment platform that offers a variety of financial products and services, including robo-advisory, commission-free trading, and savings accounts. The platform is designed to be user-friendly, catering to both novice and experienced investors.
See: McKinsey Global Payments On Cusp of ‘Decoupled Era’
2. Tech Solutions for Financial Firms (Business-to-Financial Institutions)
These WealthTech companies provide technology solutions to help financial firms or other WealthTechs improve their online wealth management services. They might specialize in certain parts of the service, like sales or portfolio management, or offer complete solutions to upgrade a firm’s entire digital wealth management system, making it more functional and integrated.
- PureFacts Financial Solutions: Located in Toronto, PureFacts provides wealth management solutions for financial advisors and institutions. Their services include fee billing, performance reporting, and client portals, aiming to enhance the digital capabilities of wealth management firms.
3. Digital Tools for Financial Advisors (Business-to-Financial Advisors)
This group focuses on creating digital tools specifically for financial advisors, making their jobs more efficient and allowing them to spend more time helping customers. They also provide a platform for customers to track their investments online. Some leading platforms in this category are challenging the traditional commission-based model by offering their services to customers for free.
- Croesus: Based in Montreal, Croesus offers portfolio management and CRM solutions tailored for financial advisors. Their platform aims to streamline advisors' workflows, enhance client engagement, and provide insightful analytics.
See: Tips on Establishing Your Small Business in the Asian Market
Steffen Pauls, chief executive office, Moonfare:
We also notice that the emerging, digitally native generation no longer looks for advice from classic intermediaries, but is taking advice from peer groups. People want better access to knowledge, not only the institutional type. Banks have to do something because they do not have sustainable business models.
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