They say it’s the Asian century. Asia is the most populous continent at 4.5 billion people, or 60% of the global population. In wealth terms, it’s still behind the US and Europe but is growing at a faster pace.
China has 2 million millionaires and more ultra-high net-worth individuals (> US$50 million) than anywhere else on earth, other than the US. But that’s not the only growth area. The emerging economies in Asia mean there are a huge number of people emerging from below the poverty line. For the first time this new middle class has surplus cash and the ability to plan and spend. By 2030 Asia will represent 66% of the global middle-class population and 59% of global middle-class consumption – up from 28% and 23% respectively in 2009. This new middle class will all need to be able to track their money, plan their cashflow and investments, and manage their assets.
In 2017, Asia and Asia-Pacific represented $89 trillion, or 32% of global household wealth – more than Europe and second only to the US.
Since the start of the millennium, China and India have had significantly higher growth in wealth than the World average, although growth in the rest of Asia-Pacific was lower than global averages.
The changing face of consumer behaviour
Personal financial advice in Asia has traditionally been delivered by insurance agents and bank relationship managers. Brokers and independent financial advisers have only been significant in certain markets, for example Japan’s economy and South Korea. The scale and cost of recruiting, training and licencing these professionals means that they’ve tended to only service the upper-middle class and high-net worth clients, leaving billions of people underserved.
Today, many consumers prefer to deal digitally – and as Asia has the most mobile-connected population on earth, that means via mobiles.
That said, many consumers would prefer a combination of digital servicing and personalised support (B2B2C).
It seems there’s a clear opportunity for the financial sector to:
- improve customer experience and engagement
- make sure everyone serving the customer uses up-to-date real-time information
- create cost-efficient transactions and wealth management platform tools.
The solution lies in wealth management technology that serve both clients and providers efficiently. While there are plenty of funky app designs in this space, they're not all connected to transaction functionality. The optimal experience is surely connected and in real-time: customers need to be able to see everything easily, as do the bots, financial advisers and call centre staff serving them.
Regulatory concerns are also present in Asia, as anywhere. Governance, tracking and recording are critical, as is building-in the agility to adapt to regulatory change. Banks are notorious for having a patchwork of financial technology serving their back office, often running on overnight batch jobs (not real-time) and managing vast inter-system reconciliations. They are clunky, costly to run and difficult to scale-up to tap into underserved segments. Plus many wealth managers and insurers depend on these legacy systems, which hampers their ability to meet client expectations.
So how can fintech help institutions service the untapped Asian market?
- Focus on an end-client designed experience to engage, deepen relationships and differentiate propositions to investors and intermediary clients through digital services and tools.
- Deploy highly scalable, yet personalised, wealth management platform solutions for clients, using tools such as mobile user interface design, robo advice.
- Reduce cost and complexity in wealth management technology through outsourcing to a large-scale highly automated global service provider.
Above all, seek out a fintech investment platform provider that invests in R&D – this market won’t stand still. Here at FNZ we’re looking at areas like personalised asset-liability modelling for the mass market; blockchain technology to enhance trust, improve efficiency and reduce cost; and predictive analytics including behavioural science, external data sources and nudge theory to improve investor outcomes.
Asia’s growth isn’t slowing down any time soon. With enormous mass and mass affluent markets and ever-increasing high net-worth and ultra-high net-worth clients, a strong fintech base will help wealth managers meet the significant business opportunities of the emerging economies in Asia.