Boston Consulting Group’s report shows that 72% of asset managers consider GenAI to have a significant or transformative impact on the industry, but only 16% have fully defined an implementation strategy.
Boston Consulting Group’s 22nd edition of the Global Asset Management Report, AI and the Next Wave of Transformation, released today, revealed that 66% of asset managers surveyed have made generative artificial intelligence (GenAI) a strategic priority for their business, with 29% committing a significant portion of their innovation budget to GenAI.
The vast majority of the respondents (72%) think that GenAI will have a significant or transformative impact on their organizations within the next three to five years, while 75% of 57 asset managers representing more than $15 trillion in AuM are actively dedicating capital and human resources for GenAI deployment in the short term. At the same time, only 16% of the managers surveyed have fully defined a comprehensive AI strategy and are working on implementing it throughout their core business.
As for the general state of the asset management segment, the global asset management industry bounced back in 2023. The industry’s total assets under management (AuM) rose to nearly $120 trillion last year, an increase of 12% over 2022. At the same time, considering the 9% plummet of 2022, the industry grew only 3% compared to the pre-crisis period.
Furthermore, asset management revenues increased by just 0.2% in 2023, while operating costs rose by 4.3% last year. Taking into account these two opposite stats, overall profits declined by 8.1% in 2023.
The industry is facing numerous challenges, like the increasing popularity of passive funds, accelerating fee compression, rising cost and revenue pressure, lack of new offerings, etc.
Dean Frankle, a managing director and partner at BCG, and co-author of the report, believes that the structural challenges facing the industry will only continue to grow. Therefore, to remain competitive, asset managers should seize the opportunities offered by AI and double down on investing in enhanced productivity, product personalization, and the opportunity of private markets, he assures.
Generative AI has tremendous potential for innovation within the asset management industry, adds Peter Czerepak, a managing director and senior partner at BCG, another co-author of the report. “Achieving results will require strategic thinking and the ability to execute at scale. With traditional sources of growth slowing down, it’s imperative for firms to move forward on this journey,” he says.
Chief Executive Officer of JPMorgan Chase & Co., the largest bank in the United States, Jamie Dimon, agrees on the significance of AI for financial institutions. Mr Dimon compared the scale of the global impact of AI, which is currently under intensive development, with a printing press, a steam engine, electricity, computing, and the Internet.
