Consolidation in wealth management industry to accelerate-Citi survey

30 Wall Street, an office building with commercial space available in the financial district, is seen in New York City, U.S., July 6, 2023. REUTERS/Brendan McDermid/File photo

HONG KONG  – Consolidation within the global wealth management sector will speed up while managers continue to face regulatory challenges, a report based on a global survey by Citigroup showed.

As many as 69 percent of the almost 170 participants across wealth management and private banking industries agreed that industry consolidation will continue to accelerate, the report, dated July 18 but not made public earlier, said.

Large wealth providers will be able to sell a wider range of products and services across different wealth tiers, and would likely benefit the most from the consolidation by winning a larger market share, the Citigroup’s “Disruption and Transformation in Wealth” report added.

Smaller providers will have to move beyond passive products and further differentiate themselves with technologies, said the report.

Among 68 percent of those polled cited regulations as the top near-term business challenge.

Survey respondents also laid out other factors like the ongoing uncertainty in the global macroeconomic, geopolitical and regulatory environment, which has increased business costs and exacerbated margin pressures for wealth managers, said the report.

A total of 72 percent of survey participants agreed that wealth providers will increasingly look to partner with fintech providers, broker dealers and custodians to upgrade their technology infrastructure and free-up internal resources and time to focus on more strategically important products and services directly related to the client experience, the report said.