- Financial Wealth Rebounded by Almost 7% in 2023, to
$275 Trillion, After a 4% Decline in
2022
- Global Net Wealth—Composed of Financial Wealth, Liabilities,
and Real Assets—Grew by 4.3% in 2023, to $477 Trillion
- North America Was Among the Fastest-Growing Regions,
Accounting for More Than 50% of all New Financial Wealth in
2023
- BCG's 24th Annual Global Wealth Report Highlights Generative
AI as an Enabler for Operational Efficiencies and Improved Client
Experience
BOSTON, July 10,
2024 /PRNewswire/ -- Global net wealth staged a
significant recovery of 4.3% in 2023, after a difficult year in
2022. Much of the growth was due to a rebound in the financial
market, as financial wealth—a subset of global net wealth—rose by
almost 7%, following a 4% decline in 2022. Over the next five
years, an estimated $92 trillion of
financial wealth will be created.
This does not alleviate the pressure on wealth managers, who
have seen their margins decrease significantly since 2007. Industry
players can no longer rely exclusively on revenues from interest
income, and they face rising costs due to inflation, operational
inefficiencies, and tightening regulatory requirements. Generative
AI (GenAI) will play a crucial role in the digital transformation
of wealth managers, with use cases along the entire value
chain.
These are among the findings of BCG Global Wealth Report
2024: The GenAI Era Unfolds, the 24th annual global wealth
report from Boston Consulting Group (BCG), being released
today.
"Wealth creation resumed in 2023—but even so, wealth managers
cannot afford to stand still," said Michael
Kahlich, a managing director and partner at BCG and a
coauthor of the report. "To capitalize on growing global wealth,
industry players, among others, will need to set a clear digital
transformation strategy and leverage GenAI to manage costs and
improve client experience."
Financial Wealth Trends by Region
Financial wealth in North
America and Western Europe
bounced back in 2023. Supported by strong equity markets,
North America was among the
fastest-growing regions, accounting for more than 50% of all new
financial wealth in 2023. The recovery was not as strong in
Western Europe, where financial
wealth rose by 4.4%.
Although financial wealth in the Asia-Pacific region grew by only 5.1% in 2023,
predominantly due to a slowdown in wealth creation in China, we anticipate a significant increase
through 2028, with the region likely to contribute nearly 30% of
new financial wealth by 2028. In addition to China, India
is well positioned to be a driver of greater wealth, having
generated roughly $590 billion in new
financial wealth in 2023, its largest increase in history.
The Top Booking Centers in a Changing World
Cross-border wealth grew by 5.1% in 2023, to $13 trillion, a slightly stronger number than
last year's.
- The most remarkable growth dynamics emerged in the
United Arab Emirates (UAE).
The UAE is currently the world's seventh-largest booking center and
is expected to surpass the Channel Islands and the Isle of Man as
the sixth-largest by 2028.
- Hong Kong's anticipated
rise to become the top global financial hub was stalled by a
temporary but significant slow-down in Chinese inflow.
Singapore now appears to be
in a position to challenge Hong
Kong's rise over the long term.
- Switzerland remains the
largest booking center worldwide, growing in line with its
historical average of 4.8% and gaining the most wealth in absolute
dollar terms.
Switzerland and other European
cross-border booking centers, including the UK and Luxembourg, are growing at a slower pace than
Singapore, the UAE, and the US.
The shift is occurring mostly because of stronger demand for
geographic diversification, reflecting a continued surge in wealth
generation in Middle Eastern and Asian markets. We expect
Switzerland to keep its position
as a leading booking center for now, capturing about 15% to 20% of
global new cross-border wealth through 2028, but there will be
strenuous competition for first place.
GenAI and the Future of Wealth Management
BCG's GenAI in Financial Institutions benchmarking survey found
that among more than 60 major financial institutions—including many
wealth managers and private banks—85% believe that GenAI will be a
highly disruptive and/or transformational force. But even though
everyone is talking about it, many players are still hesitant to
act, with 82% lacking an overarching, longer-term GenAI strategy
and a short-term implementation roadmap.
"GenAI and other AI tools will disrupt the traditional ways of
working for wealth managers," said Akin Soysal, a BCG managing
director and partner and a coauthor of the report. From client
acquisition and onboarding to servicing and ongoing support, there
are many ways that technology will streamline operations—also in
the area of compliance—while improving customer experience. The
challenge for wealth managers is to know where to begin."
Download the publication here:
https://www.bcg.com/publications/2024/global-wealth-report-the-gen-ai-era-unfolds
Media Contact:
Eric
Gregoire
+1 617 850 3783
gregoire.eric@bcg.com
About Boston Consulting Group
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SOURCE Boston Consulting Group (BCG)