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: PwC 2024 Asset & Wealth Management Report

• Almost three-fourths (73%) of asset and wealth management (AWM) organisations say AI is seen as the most transformational technology over the next 2-3 years 

• 81% are contemplating strategic partnerships, consolidations, or mergers and acquisitions (M&A) to enhance technological capabilities and build an ‘extended tech ecosystem’ 
• Global assets under management (AUM) projected by PwC to hit US$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 organisations look to tokenisation to democratise finance: PwC expects tokenised invest 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 

Jakarta, TBC – 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 Asset & Wealth Management Report surveyed 264 asset managers and 257 institutional investors from across 29 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 democratise access to investment products ahead of a great wealth transfer. 

The report also finds that global AUM held by AWM organisations around the world is projected by PwC to hit US$171 trillion by 2028, with tokenised investment funds to surge at a CAGR of 50%. 

John Dovaston, PwC Indonesia Advisor, said, “In Indonesia, the financial services industry is poised to benefit significantly from these technological advancements. The report's projection of global assets under management (AUM) reaching US$171 trillion by 2028, with a notable growth in alternatives, underscores the potential for local asset managers to tap into new growth opportunities. The emphasis on tokenisation and the expected surge in tokenised investment funds to over $317 billion by 2028 is particularly exciting for the Indonesia market, as it presents a pathway to democratise finance and expand market offerings.” 

Disruptive technologies will fuel AWM revenue growt

AWM organisations 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. 80% say such technologies will fuel revenue growth, with 84% noting it will improve operational efficiency and 72% noting it will improve employee productivity. The provision of tech-as-a-service1 by AMW organisations 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 organisations are currently using disruptive tech to enhance personalised investment advisory. 

Global AUM to hit US$171 trillion by 2028, with alternatives leading the way

Under baseline projections, PwC research estimates global assets under management (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 organisations look to new growth opportunities, tokenisation stands out, with tokenised products expected by PwC to increase from $40 billion to over $317 billion in 2028, representing a 51% CAGR. Tokenisation, or fractional ownership,2 could expand market offerings by democratising finance and lowering premiums, with tokenisation planned to be offered notably by asset managers in private equity (53%), equity (46%), and hedge funds (44%). While 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.

AWM looks to consolidation and tech ecosystems as talent remains top priority

Against this backdrop, 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 organisations 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.

John Dovaston, PwC Indonesia Advisor, added, “As 81% of global AWM organisations contemplate these strategies to enhance technological capabilities, Indonesian asset managers can leverage similar approaches to build extended tech ecosystems, drive innovation, and remain competitive. The focus on skills and talent is another critical area highlighted in the report. With 73% of asset managers considering M&A to access skilled expertise, it is imperative for Indonesian firms to invest in upskilling and reskilling their workforce to meet the demands of a digital-first market. This will not only enhance operational efficiency but also ensure that we are well-positioned to cater to the evolving needs of our clients.”