Wealth services enabled by digital and AI capabilities could account for up to half of revenue growth for the industry in Asia in the coming three years, according to McKinsey.

Banks and wealth managers in Asia that are able to seize the digital opportunity in the affluent segment could see a revenue boost of $20 billion to $25 billion, according to a report by global consulting firm McKinsey. 

In fact, this increase could potentially contribute to more than half of the wealth management industry’s revenue growth in the region over the next three years.

McKinsey defines the affluent segment as households with investable assets of $100,000 to $1 million.

Fee Reluctance

Historically, clients in the affluent segment have been reluctant to pay fees for advisory services due to the high cost and a preference for basic assets like cash and real estate. But advancements in technology have reduced these costs for wealth advisors and improved client access. 

According to McKinsey’s «Personal Financial Services Survey», approximately 80 percent of affluent and mass affluent respondents in Asia say they would or might consider receiving advisory services remotely through digital channels. 87 percent and 64 percent of respondents in developed and developing markets, respectively, say they are willing or may be willing to pay advisory fees.

Four Dimensions

For banks and wealth managers seeking to tap the potential of the affluent segment, McKinsey recommends they focus on tailoring their approach across four dimensions: segmented customer value propositions, reimagined digital engagement, AI-powered decision-making and core technology as well as an operating model and talent fit for purpose.

«The current wealth management environment in Asia presents a rare opportunity: a fast-growing market that is hungry for new solutions even as technology is emerging to help banks and wealth managers provide the sought-after offerings,» said the report entitled «Digital and AI-enabled wealth management: The big potential in Asia».

«Forward-looking banks and wealth managers that take deliberate steps to rethink every aspect of their business model can put themselves in a position to capitalize.»