A report from management consultant McKinsey has forecast that the wealth technology market could grow its assets under management by 400% in the next five years.
According to McKinsey, the wealthtech market will likely grow by 25-30% each year. Consequently, the AuM could be tripled or quadrupled in that time, from around US$700 billion at the end of 2022 to $2.25 trillion by the end of 2025.
McKinsey anticipates a similar level of growth from both the direct-to-consumer and business-to-business channels, albeit the B2B sector is twice as large and could therefore be worth $1.5 trillion by 2027.
The report cites the increasing wealth in Apac as the primary cause for the positive wealthtech forecast, also adding that it is changing the wealth management market as one previously dominated by the high-net-worth individuals but now more populated by the affluent segment, which will account for around a third (34%) of onshore personal assets by 2027.
At the same time, the affluent segment currently has a low penetration rate in terms of wealth management and is, therefore, “notably untapped and underserved”.
When this is added to the poor pension-to-GDP ratios in the many emerging Apac countries, the result is a “massive undeployed potential for wealthtech companies”.
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