The wealth management landscape in the Middle East is increasingly using technology to meet increasing demand, according to Mika Kastenholz, head of products, services and investments at LGT Private Banking.
Speaking to FT Adviser, Kastenholz discussed how wealth management firms in the Middle East were using AI to meet the demand generated from the large influx of UHNWIs entering the region.
He said: “The UAE alone was expected to see 6,700 new millionaires move to the region in 2024, and as the Middle East’s infrastructure continues to come on leaps and bounds, this rate is not expected to slow.
“For those who built their wealth in the region, single family offices are becoming increasingly popular vehicles, driven by the need to centralise family investments, manage financial risk, formalise succession planning, and improve the organisation of family assets.”
UK vs Middle East
Kastenholz explained how both the UK and the Middle East were increasingly integrating AI into wealth management but in different ways, guided by variances in market maturity, client expectations, regulatory developments and technological infrastructure.
“The UK already has a well-established wealth management sector that provides a relatively standardised approach across firms and managers.
“Currently, technological advancements are primarily leveraged to enhance these existing services rather than fundamentally alter them, and accordingly, the most common uses for AI currently revolve around back-office processes, automating compliance, and streamlining administrative functions.
“Wealth management in the Middle East, on the other hand, caters largely to the ever-growing numbers of (U)HNWIs – a cohort accustomed to bespoke services.
“While AI is becoming a vital tool to support these personalised services, helping to tailor investment strategies, predict client needs, and enhance concierge-esque support, it cannot replace the expertise and collaboration of seasoned investment professionals,” he said.
Clients are looking for deeper insights, greater transparency, and highly personalised investment strategies that align with changing values.
Kastenholz also highlighted how client attitudes varied across the two regions, where the UK suffered with a trust gap around AI, innovation and advancement were a key selling point in the Middle East.
“Of course, the Middle East faces its own hurdles. Certain countries within the Gulf Cooperation Council have strict regulations around the storage of client data in public clouds, complicating the effective deployment of AI.
“The relative youth of the industry also means that many financial institutions may utilise fragmented legacy systems, where data is spread across multiple systems and platforms, bringing inefficiencies to data exchange and integration.
“Conversely, the UK benefits from a more established AI industry, bringing greater talent resources to aid the integration – although certain areas of the GCC are proving powerful lures for industry talent,” he added.
Evolving client services
Client service was evolving far beyond the practices previously expected, according to Kastenholz, who said it was no longer about delivering returns.
“Clients are instead looking for deeper insights, greater transparency, and highly personalised investment strategies that align with changing values.
“The change itself is linked to the evolution of client demographics, and the changing experience of the consumer more widely.
“With the great generational wealth transfer thoroughly in motion, millennial and Gen Z now make up a considerable portion of client bases.
“These technologically-savvy generations, who have grown up with intuitive, available digital services, naturally expect the same from their wealth managers.
“Quick access to portfolios, frictionless digital interfaces, and innovative investment options such as cryptocurrencies, are quickly becoming baseline requirements for wealth managers,” he explained.
alina.khan@ft.com
