The Developing Wealth Management Landscape in the GCC

Having recently read the funding announcements from both Performativ (from Denmark), and WealthOS (in the UK) as well as examined the offering from Velexa Technologies, it would appear to be the case that there remains some interest among early stage investors in the investment as a service concept, as well as the modulated /lego like, cloud/api first delivery model.? While the underlying business opportunity to apply these technologies for direct consumer facing goal based investment solution designs is still something that I continue to question, it did give me pause to consider how the evolution of these types of digital wealth solutions might be warranted to deliver answers to substantial emerging markets, of which the GCC, may be one. Thus, the instigation for this week’s blog.

In my current role with Objectway, I have some significant visibility to the evolving demand profile of different types of client segments in the GCC involved with delivering wealth solutions to a broad spectrum of underlying customers, and from this would summarize the emerging picture of solution demand as follows:

1)???? GCC banking and asset management organizations with wealth capabilities generally are developing their plans in a much more holistic way than their European, or American counterparts. ?By holistic, I mean much less distinction in design thinking between the mass affluent and HNW than perhaps one sees elsewhere. The bleeding between private banking and premium banking is much more apparent in the GCC as UHNW translates into significantly greater wealth, i.e., US$50ml and above, and family office and investment corporate in nature.

2)???? Many clients want to fully accommodate the principles of self-service wealth management that is more akin to brokerage style activities and activation in the region, but also want to ensure that prospects can quickly and easily change tack in their wealth management requirements. In other words, these clients are inherently rejecting a segregation of direct, advisory, and discretionary styles, and instead favouring solution designs that can accommodate selecting any of these engagement models, and associated costs, relationships, and client experience.

3)???? While one might naturally expect many opportunities to be framed in a shariah or Islamic banking context this is not something that we, at Objectway, are witnessing very often in our interactions. There are definite institutions who will only implement a wealth solution that abides by these principles but given the changing demographic features of the GCC region, and the desire for many of the governments in the region to attract foreign talent from around the globe, local and regional banking and asset management players generally show a disposition to solution design with a sub-set of localization available as opposed to a full localized model. This of course creates greater complexity for potential partners.

4)???? The evolution of the GCC in wealth terms creates some additional challenges due to the fact that so much wealth was exported and continues to be exported from the region. While this predominantly effects more wealthy clients, there is probably a greater need for account aggregation in the region than in many others, and much more consolidation in the advice process of offshore and onshore positions as well as internal and held away custodial assets. This relates to both traditional asset classes, as well as alternative asset classes such as in real estate.? This creates demands for solution providers to further widen their ecosystem partnerships and collaborations as they relate to transacting, accounting, and reporting on alternative asset positions.

5)???? Finally, more established, and traditional wealth participants in the GCC have a very strong desire to work with firms that are prepared to make a significant resource and investment commitment to the region and build a track record based on the success of local deployments. While these firms will certainly display strong engagements with modern solution thinking, they would expect these organizations to first work with early stage fintech firms that are trying to build a position in the region before offering their approach to the more established players. ?Five or Six years ago, this would have created very little opportunity for emerging players, like the ones I mentioned at the outset, but accelerator programs throughout the GCC have been probably the most active in supporting new ideas in the wealth, banking, and asset management arena for the last 4yrs (while consolidation is happening elsewhere) and thus might prove more fertile hunting grounds for those that bring the right capabilities with fast deployment and reduced commercial expectations.

When I think about the solution design principles taking shape in the GCC, it has a very different profile than other emerging centres in Latin America and APAC. ?Where many banking and financial institutions in these regions have definitely been interested in delivering simpler propositions to secure some investment flows into brokerage and wealth accounts, the GCC, faced with a different sort of demographic, and far greater diversity in financial capabilities is adopting its own unique approach to digital wealth. ??

Many, many organizations are still in the early stages of a discovery and execution journey given this more complex set of design principles, but I believe from next year onwards, we will start seeing the region begin to bring to life a new type of holistic solution design that could make the offering there the envy of other wealth centres if executed and maintained properly.

If you want to learn more about the way that Objectway is tackling these requirements, please feel free to reach out to me.