AI and Disruptive Tech Set to Drive Growth in Asset and Wealth Management – PwC’s Projections for 2028

According to PwC’s 2024 Asset & Wealth Management Report, 80% of asset and wealth management (AWM) firms believe that disruptive technologies, particularly AI, will be key drivers of revenue growth. The analysis suggests that companies that rapidly adopt ‘tech-as-a-service’ could see a revenue boost of up to 12% by 2028.

The report, which surveyed 264 asset managers and 257 institutional investors from 28 countries, also reveals that 81% of respondents are considering strategic partnerships, consolidations, or mergers and acquisitions. These moves aim to enhance technological capabilities, build expansive tech ecosystems, foster innovation, expand market presence, and democratize access to investment products as the industry prepares for a major wealth transfer.

Global assets under management (AUM) are projected to reach $171 trillion by 2028, with tokenized investment funds expected to grow at an annual rate of 51%. The report emphasizes the transformative impact of AI, with 73% of AWM firms identifying it as the most influential technology for the next two to three years. Additionally, 84% believe AI will enhance operational efficiency, and 72% anticipate gains in employee productivity. The potential provision of tech-as-a-service could, according to PwC, lead to a significant uplift in revenues over the coming years.

Albertha Charles, PwC UK’s Global Asset & Wealth Management Leader, highlighted the rapid changes AI is bringing to the AWM industry. She pointed to increased revenue, productivity, and efficiency as key outcomes, noting that many market players are pursuing strategic consolidations and partnerships to create tech-driven ecosystems. These ecosystems are designed to integrate data management, evolve service offerings, and prepare for a shift in customer demographics driven by younger and more affluent clients. Charles stressed that for AWM firms to lead in this emerging digital market, they must prioritize technological transformation while also investing in digital skills for their workforce to stay competitive.

Although disruptive technologies offer opportunities to revolutionize operations and tap into new markets, the report indicates that 68% of AWM firms allocate less than one-sixth of their capital to such innovations. Additionally, over half of institutional investors (59%) expressed that these technologies could lessen their dependence on asset managers. Despite this, only 20% of AWM firms currently utilize disruptive technology to enhance personalized investment advisory services.

PwC’s baseline forecasts suggest that global AUM will grow at a compound annual growth rate (CAGR) of 5.9%, reaching $171 trillion by 2028—up from last year’s 5% growth rate. Alternative investments are expected to expand even faster, with a projected CAGR of 6.7%, reaching $27.6 trillion by 2028.

Tokenization, identified as a standout opportunity, is forecasted to increase from $40 billion to over $317 billion by 2028, reflecting a 51% CAGR. This process of fractional ownership is expected to diversify market offerings, lower costs, and democratize access to investments. Asset managers are planning to offer tokenization in private equity (53%), equities (46%), and hedge funds (44%). However, only 18% of firms currently include emerging asset classes like digital assets in their portfolios, even though those that do are seeing increased inflows.

As the industry adapts to digital disruption, 30% of asset managers report a skills gap in relevant expertise. Among AWM firms exploring mergers and acquisitions, 73% view access to skilled talent as the primary motivation for deal-making over the next two to three years. In response to these challenges, over 81% of AWM companies are considering strategic alliances, consolidations, or acquisitions to create a robust tech ecosystem and fuel future growth.

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