The wealth management sector is witnessing a significant shift as artificial intelligence (AI) becomes a driving force behind mergers and acquisitions (M&A). A recent PwC report highlights that 81% of asset managers are considering strategic partnerships or acquisitions to enhance their technological capabilities, anticipating a surge in AI-driven revenue growth by 2028.
Key Takeaways
81% of asset managers are exploring M&A opportunities to access AI expertise.
AI is expected to boost revenues by 12% for wealth managers by 2028.
80% of firms believe disruptive technologies like AI will enhance operational efficiency.
Global assets under management (AUM) are projected to reach $171 trillion by 2028.
The Rise of AI in Wealth Management
The integration of AI into wealth management is not just a trend; it is becoming a necessity. According to the PwC report, the global assets under management are forecasted to hit $171 trillion by 2028, with AI playing a crucial role in this growth. Wealth managers are increasingly recognizing AI as a transformative technology that can enhance their service offerings and operational efficiency.
Strategic Partnerships and M&A Activity
The report indicates that 81% of the surveyed asset managers and institutional investors are looking to enter strategic partnerships or M&A deals to bolster their technological capabilities. This move is driven by the need to innovate and stay competitive in a rapidly evolving market. The focus is on building an "extended tech ecosystem" that can support new market demands and democratize access to investment products.
Revenue Growth Projections
Wealth managers expect AI to significantly impact their bottom line. The report suggests that firms adopting AI technologies could see a revenue increase of approximately 12% by 2028. This potential growth is prompting many firms to allocate resources towards innovative technologies, although only 20% are currently utilizing disruptive tech to enhance personalized investment advisory services.
The Role of Bank of America
Bank of America is leading the charge in AI innovation within the financial services sector. The bank has reported a 94% increase in its AI patent portfolio since 2022, showcasing its commitment to leveraging AI for operational efficiency and customer service enhancement. With nearly 1,100 AI and machine learning patents, Bank of America is setting a benchmark for other firms in the industry.
Conclusion
As the wealth management industry continues to evolve, the integration of AI is becoming increasingly vital. Firms that embrace this technology through strategic partnerships and M&A will likely emerge as leaders in the market. The anticipated revenue growth and operational efficiencies associated with AI present a compelling case for investment in this transformative technology. The future of wealth management is undoubtedly intertwined with the advancements in AI, making it an exciting space to watch in the coming years.
Sources
AI demand set to spark M&A deals frenzy among fund managers, Financial News London.
PwC: Asset managers look to AI M&A to bolster growth, Investment Week.
PwC: Asset managers look to AI M&A to bolster growth, Professional Adviser.
Bank of America aumenta su portafolio de IA - Funds Society, Funds Society.
80% of wealth managers say disruptive tech like AI will fuel revenue growth: PwC, The Edge Singapore.