With total assets under management (AuM) having reached nearly $120 trillion globally , 2023 appears to have been a year of rebound for the asset management industry (AuM + 12% vs. 2022). All regions of the world participated in this recovery: +16% in North America, +8% in Europe, +5% in the Asia-Pacific markets (excluding Japan and Australia).
However, this impressive growth masks the sector’s vulnerabilities. Its revenues increased by only 0.2% in 2023, while costs increased by 4.3% over the year. As a result, profits fell by 8.1% . How to explain this discrepancy? What challenges does the sector face? How can generative AI become a new driver of growth?
In its new report “ Global Asset Management Report 2024 – AI and the Next Wave of Transformation ”, BCG collected data from 44 countries around the world, including France. Here are the main lessons.
Asset managers face five types of pressure , with no sign of letting up in sight:
- Constant pressure on income . Asset managers can no longer rely on market performance to ensure their revenue growth. However, since 2005, the rise in markets has accounted for nearly 90% of the sector’s revenue growth.
- Passive products are becoming more and more popular . Passively managed investment products continue to take the lion’s share. In 2023, they attracted 70% of total global net inflows (funds and ETFs), approximately $920 billion. This is a sharp increase compared to the period from 2019 to 2022, during which 57% of net flows went to passive products.
- Pressure to reduce management fees continues to increase. Average revenues reduced to outstandings in 2023 were 22 basis points (bps), compared to 25 bps in 2015 and 26 bps in 2010.
- An exponential increase in costs. Since 2010, they have increased by approximately 80%, at a compound annual growth rate of 5%.
- Despite attempts at innovation, the share of new products that pass the decade mark is lower. Only 37% of mutual funds launched in 2013 still existed in 2023.
Generative AI to the aid of asset managers?
In this context, an artificial intelligence deployment strategy could accelerate the transformation of the sector model – particularly in the areas of sales-marketing, personalization of customer relations and IT.
To assess the AI maturity of asset managers, BCG (in partnership with the Investment Company Institute and the CFA Institute), conducted a global survey on the adoption of generative AI (GenAI) in the first quarter 2024. This comparison covers 57 asset managers, representing more than $15,000 billion in assets under management. Among the main conclusions:
- 72% of managers surveyed believe GenAI will have a significant or transformative impact on their organization in the next three to five years.
- 66% have made GenAI a strategic priority for their company
- 75% are devoting capital and human resources to the near-term deployment of GenAI, and 29% are dedicating a significant portion of their innovation budget to it. However, only 16% have defined a strategy and implemented it throughout the company.
