WealthTech in Asia-Pacific is exploding. In the last five years the number of WealthTechs in this region has increased by 1.5 times and now stands at around 100. In that same period, the valuation of WealthTechs and the amount of funding they received both increased by almost 10 times. McKinsey research shows that wealth management in Asia-Pacific is at an inflection point, with an estimated $81 trillion onshore opportunity by 2027, and is rapidly gaining momentum globally as more wealth management firms recognize its potential benefits.
Such were the findings that Senior Partner Joydeep Sengupta presented at the Endowus WealthTech Conference 2023, for which McKinsey was a Knowledge Partner, where he introduced McKinsey’s newly published report, WealthTech in Asia-Pacific: The next frontier in financial innovation. In his keynote speech, Joydeep stressed that the three pillars pivotal in driving the growth of WealthTech are accessibility, affordability, and offering comprehensive financial advice to all. Given that in Asia people have not had widespread access to financial services, he said, these three objectives are fundamental. The time is also right—the estimated “onshore” PFA is approximately $81 trillion by 2027; with wealth management penetration projected to scale up to 22-27 percent by then too. Steep growth is likely to be seen amongst the affluent customer segment, with share with a projected CAGR growth in PFA of 8 percent from 2022 to 2027.
What will it take for WealthTechs in Asia-Pacific to achieve self-sustainability, scalability and profitability? Cracking the code, Sengupta shared, will require WealthTechs to overcome what McKinsey has identified as six core challenges, including high customer acquisition costs and a fragmented ecosystem, as some global players have managed to do. Those that manage to do so stand to benefit from this sector’s anticipated substantial expansion. By 2027, the market could triple or even quadruple its present AuM and revenue pools.
Leaving the audience with questions for thought, Joydeep segued into moderating a panel comprising key players: Sam Rhee, Co-founder & Chairman, Endowus; Oi-Yee Choo, CEO, ADDX; Everett Leonidas, Head of APAC, Citi Ventures Investments; and Chetan Karkhanis, SVP & Head of Digital Strategy and Wealth Management for Asia Pacific, Franklin Templeton. Drawing on their experience and expertise, the panel shared their views on this evolving sector such as how to scale a WealthTech company as Endowus is doing, venture opportunities amongst WealthTech start ups, how traditional wealth management is changing alongside WealthTech and the story of WealthTech—from whence it emerged and where it could go from here.