Boston Consulting Group (BCG) has released its 2024 Global Asset Management Report, highlighting the Middle Eastern asset management sector’s significant contribution to the industry’s growth. According to the report, the region’s Assets Under Management (AuM) surged by 13%, rising from $2 Trillion in 2022 to $2.3 Trillion in 2023, emphasizing the sector’s pivotal role in the global asset management landscape.
BCG’s latest report, “AI and the Next Wave of Transformation,” comprehensively analyzes how artificial intelligence reshapes the asset management industry. The report surveyed asset managers who collectively oversee over $15 Trillion in assets and reveals a strong consensus among industry leaders that a shift toward AI-driven management is essential.
“After a year marked by significant advancements in generative AI, we are starting to see its effects across industries,” says Lukasz Rey, Managing Director & Partner and Middle East Head of Financial Institutions at BCG. “As the asset management sector faces growing structural challenges, embracing artificial intelligence is no longer optional but necessary for maintaining competitiveness. By investing in AI-driven productivity, personalized product offerings, and the expansive potential of private markets, asset managers can navigate the slowing growth in traditional areas and spearhead innovative, scalable solutions.”
A Well-Executed AI Strategy Can Drive Growth
Investing in AI is crucial as the technology evolves rapidly, and asset managers must act now to avoid falling behind. The report outlines three major themes that should top the leadership agenda to thrive in the years ahead: productivity, personalization, and private markets. These areas, accelerated by AI and its subset, Generative Artificial Intelligence (GenAI), are critical for asset managers to enhance operations, develop tailored products, improve customer experiences, and adapt to new pressures on allocation and risk management strategies, collectively referred to as the “three P’s.” Here’s how AI can be utilized in each of these areas:
- Productivity: AI enhances productivity in asset management by automating and optimizing routine tasks and complex processes. It facilitates faster decision-making and improves operational efficiencies across various functions of asset management firms. For instance, AI can automate data analysis, optimize trade executions, and streamline reporting and compliance workflows. This reduces operational costs and frees human resources to focus on more strategic tasks.
- Personalization: AI significantly advances the personalization of client services in asset management. AI can understand and accurately predict client needs and preferences by analyzing large datasets. This capability allows asset managers to tailor investment products and interactions to individual client profiles. AI-driven tools can manage personalized portfolios at scale, offering individualized investment solutions that were previously only feasible for high-net-worth individuals or institutional clients. AI can enhance the customer experience through more targeted marketing and by providing real-time, personalized advice and insights.
- Private Markets: AI can transform deal sourcing and due diligence processes in private markets. By processing and analyzing vast amounts of unstructured data, AI can identify investment opportunities faster and assess potential deals with greater precision. AI tools aid asset managers in conducting thorough due diligence, risk assessment, and valuation tasks more efficiently, accelerating the investment cycle and potentially increasing returns. Additionally, AI can assist in managing and optimizing the performance of investments in private markets by providing insights beyond the scope of traditional analytical methods.
Integrating AI into asset management operations within the framework of the three P’s—enables firms to enhance efficiency and capitalize on new opportunities.
Middle Eastern countries have strived towards positioning themselves as leaders in AI preparedness, however, more can be done to recognize the potential benefits of early adoption and innovation. By integrating AI into their economic frameworks, these countries can work towards significant workflow transformations, enhancing the synergy between AI-driven solutions and human creativity. Asset management firms in the Middle East that effectively integrate these technologies can enhance efficiency, personalize client experiences, and capitalize on new opportunities. Such firms can maintain competitiveness and contribute to the region’s evolving status as an AI innovation and implementation center.
Download the Full Report Here.
