The Asia-Pacific has taken the lead position as the region with the most high net worth individual (HNWI) wealth and population and wealth management firm’s net income could be at risk due to lack in digital capabilities, according to Capgemini’s 20th annual world wealth report (WWR)
Capgemini’s WWR shows that global HNWI wealth in 2015 only grew 4% whereas wealth in Asia-Pacific grew by 10%, pushing North America out of lead position. This makes it the first time that Asia-Pacific is ahead of North America for both HNWI wealth and population.
In 2015, Asia-Pacific held $17.4trn (£11.7) in wealth with a 5.1m HNWI population in comparison to North America’s $16.6trn in HNWI wealth and 4.8m in population.
If Asia-Pacific wealth continues to grow at this rate it will represent two fifths of the world’s HNWI wealth in 10 years, more than that of Europe, Latin America, and Middle East and Africa combined.
Individual wealth managers are managing only a third of global HNWI wealth and both HNWI and wealth managers have expressed a demand for digital tools.
According to the WWR, long-term success for wealth management firms will depend on their willingness to explore partnerships with FinTech companies as well as improving their digital development.
The lack of digital capability puts profits, client and employee retention at risk, with 56% of firms’ net income at risk due to lack of digital capabilities.
More than half (55%) of wealth managers are not satisfied with their firms’ digital capabilities and over a third would even consider moving jobs.
Anirban Bose, head of banking and capital markets at Capgemini financial services business unit said: ‘It is remarkable that only one-third of HNWI wealth is currently with wealth management firms which shows how great the growth potential is for firms that can combine digital technology and FinTech capabilities with human expertise and relationships, to reflect state-of-the-art services for clients.’
Increasing demand for digital services in areas such as automated advisory platforms, open investment communities and third party capability plug-ins are all areas where FinTechs are strong.
The report found that there has been a 20% increase in HNWI demand for automated advisory services.
Bose said: ‘As wealth firms and wealth managers face a number of converging market dynamics, including increased competition from FinTechs, firms need to be making progress on all aspects of their digital capabilities to ensure they remain relevant to clients who may be wooed by their technology-driven competitors
‘The latest World Wealth Report findings reinforce the need for firms to adapt to meet evolving client and manager expectations alike, as nothing less than a high level of digital maturity will be adequate in the face of digitally-native competitor providers.’
Capgemini’s World Wealth Report is here.
