Customers in Asia-Pacific are increasingly turning to WealthTechs to manage their wealth, with an estimated $700 billion of personal financial assets (PFA) projected to be transferred to WealthTechs in the next four years. This was a key finding in McKiney’s 2024 article A wake-up call to tap into digital wealth, which built on our 2023 report, WealthTech in Asia-Pacific: The Next Frontier in Financial Innovation. A survey conducted for the 2024 article also showed that 80 percent of the respondents clearly prefer digital solutions because they are cost-effective, more transparent, give users more control and offer personalized investment strategies.
Senior partner Joydeep Sengupta presented the findings of this article at the Endowus WealthTech Conference 2024, which 2,500 experts in the wealth management industry attended in-person and virtually. In his presentation, he shared consumer insights from the article and addressed a pressing question: To what extent could digital wealth platforms be adopted, and how could traditional financial institutions evolve?
Globally, WealthTechs’ Assets Under Management (AUM) increased significantly, enabled by high interest rates, and they received robust seed and pre-seed funding. In 2024, venture capitalists invested $6.5 billion in WealthTechs, up from $4.3 billion in 2023—though Asia-Pacific lags. AI-based advisory platforms are playing a bigger part in WealthTechs. In 2024, over 250 WealthTechs globally pivoted to AI-enabled business models, with many in Asia-Pacific following a similar trend. Customers also have a high degree of trust in WealthTechs and remain sensitive to price, with half of the customers surveyed saying they were willing to pay only 10–20 percent of traditional banks’ fees for advisory services.
None of this is without challenges of course. Joydeep identified five core challenges WealthTechs face: having strong enough tech infrastructure, managing security, ensuring their customers are sufficiently educated about investing, maintaining the right level of human engagement, and limited demand from ultra high-net worth customers.
Banks could further penetrate the digital wealth market by either acquiring WealthTechs, entering into strategic partnerships with them or creating in-house digital platforms. Joydeep reinforced that strategic partnerships with WealthTechs could give banks a competitive edge by helping them advance in areas such as innovation, customer engagement and marketing, and become more accessible and affordable. Collaborating with WealthTechs could also enable banks to save what they would spend on their own digital wealth management platforms.
Striking a balance between being practical and progressive, Joydeep left the crowd pondering three considerations for successful collaboration. First, how could banks avoid possibly cannibalizing their business? Second, how and why should banks embed a digital wealth play into their existing business? Lastly, he reiterated the question of which path banks could take: build, partner or buy?
Following Joydeep’s presentation, associate partner Vishal Kaushik led a panel discussion with Gregory Van, chief executive officer, Endowus; Patricia Quek, head of global wealth management Singapore and Malaysia, UBS; L.G. Lim, global head of financial intermediaries, family office and wealth advisory, Bank of Singapore; and Everett Leonidas, head of investment, Asia Citi Ventures (left to right in the photo below). The panel spoke about the direction and role of AI in the wealth management industry and opportunities for banks and WealthTechs to collaborate.
Unanimously, the panel agreed that maintaining human interaction in wealth management platforms is key. L.G. stressed that clients want to feel empathy from their advisor, which AI may not be able to provide. This is a limitation of current AI technology though it can and has built trust. Similarly, Greg highlighted that it is important for WealthTechs to be customer centric—to meet customers where they are at. In other words, to satisfy their customers, WealthTechs and banks must accurately segment and know their customers. Different customers prefer different levels of digital and human interaction, for instance. Patricia noted that clients invest for widely ranging reasons and some clients are more emotionally attached to funds than others. To this point, L.G. underlined the importance of understanding a client’s purpose for investing, and Everett mentioned that AI’s backend operations can be powerfully efficient and gather information about customers very quickly. Greg highlighted that Endowus intentionally tailors their services to suit the needs of different customer segments to provide sharp investment advice.
The panel went on to explore the possibility of collaboration between banks and WealthTechs. L.G. commented some collaboration is already in place, ranging from front-end services like advisory to back-end research, and emphasized how the value and purpose of banking must retain. Adding on, Greg expressed his enthusiasm to collaborate with banks, highlighting how WealthTechs can create value by offering the banks' products to their unique and diverse customer base.
The animated panel ended by estimating what percentage of total managed wealth in Asia will go to WealthTechs by 2030. Patricia projected that a massive 30 percent would, while L.G. and Everett both shared the opinion that 10 percent of wealth from customers that have over $10 million AUM and a huge 70 percent from those that have $250,000–$10 million AUM will flow to WealthTechs, and Greg estimated 20 percent. However, Greg mentioned, ‘the pie is growing massively, and players can find their own segment. It’s not winner takes all.”