The wealthtech industry in Asia Pacific is on the brink of substantial expansion, following its growing economy and increasing wealth in the region.
Asia Pacific (APAC) wealth technology industry is predicted to grow by 25 to 30 percent per year. The market could triple or even quadruple its AUM by 2027 to reach up to $2.25 trillion, from around $700 billion at the end of 2022, according to the «WealthTech in Asia Pacific report» by McKinsey & Company.
The direct-to-consumer (D2C) wealthtech firms are poised to grow their AUM to around $750 billion by 2027, from $200 billion last year. Meanwhile, the business-to-business (B2B) AUM is projected to grow by approximately 25 percent per year to $1.5 trillion by 2027.
Affluent Segment
Although the wealth management industry is traditionally dominated by the high-net-worth individuals (HNWI) segments, the increasing wealth in APAC has boosted the growth of the affluent segment. The report predicts this segment will be 34 percent of onshore personal financial assets (PFA) by 2027.
The affluent segment’s CAGR is eight percent from 2022 to 2027. As of today, the affluent segment has a comparatively low wealth management penetration of 15 to 20 percent. «This segment is notably untapped and underserved», the report said.
Retirement Corpus Needed
Furthermore, customers are increasingly showing a critical need for a retirement corpus. This mainly happens within emerging APAC countries where the pension to GDP ratio lags behind developed APAC and other nations.
Indonesia and Malaysia, for example, have only less than two percent of the pension to GDP ratio due to their younger population. «This opens a massive undeployed potential for wealthtech companies», McKinsey report said.
