The role of technology in transforming GCC wealth management

The Gulf Cooperation Council (GCC) has been successfully diversifying away from the oil and gas sector towards finance, drawing in international investors with its open economy, political stability, and growing wealth, says Avaloq’s Akash Anand, Regional Director and head of the Middle East and Africa.

Over the past two decades, newer financial hubs have emerged across the GCC, including the Dubai International Financial Centre (DIFC), Securities and Commodities Authority (SCA), Abu Dhabi Global Markets (ADGM), Qatar Financial Centre (QFC) and Bahrain Financial Harbour (BFH).

A key feature of the GCC is its burgeoning expat community and increasingly affluent local population. This has resulted in growing demand for specialized, onshore private banking and wealth management services to help individuals optimally manage and grow their wealth.

New wealth management trends

The GCC is witnessing a shift towards more client-centric business models with a greater focus on fiduciary services, bringing the sector more closely in line with established financial centres such as London, Zurich, and Singapore. This trend enhances the value provided to clients by ensuring fee transparency, fair value, and personalized service that meets their specific financial needs and expectations.

The region is expected to continue experiencing strong cash inflows, accelerating the demand for wealth management services. Financial institutions need to support the GCC’s growing affluent segment by offering specialized services, including discretionary portfolio management, Islamic finance solutions and Lombard lending, to help clients grow their wealth over the long term.

A sprawling technology landscape

As the region’s wealth continues to grow, so too does the demand for sophisticated products and wealth management services. The pressure to rapidly meet these demands has often led private banks and wealth management firms to incorporate multiple specialized solutions to expand their offering quickly, with different solutions for portfolio management, investment advisory, custody and other investment services.

However, this rapid growth and tech adoption can result in a lack of integration between a firm’s disparate platforms. The issue is further exacerbated by ongoing M&A activity, with firms acquiring both business books and platforms in an effort to grow into new client segments and regions.

In the back office, staff have to manage multiple systems with little straight-through processing, which means manual processing, operational inefficiency, and risk of human error. Meanwhile in the front office, relationship managers need to swivel-chair between different interfaces to gain a full overview of their clients, diverting their attention away from strategy optimization and personal service. This in turn makes it more difficult for local players to compete against international peers.

What lies ahead for the GCC

Growing local wealth and strong capital inflows from expats mean that financial institutions in the GCC are in a good position to review their technology landscape to help establish and expand their wealth management business. The next step in the GCC’s digital transformation journey is to integrate and consolidate systems to ensure long-term scalability and growth – with the flexibility to seamlessly integrate new functions or third-party applications.

The key challenge for financial institutions in the GCC involves implementing a unified system with centralized middle and back-office operations that can support the diverse investment and regulatory requirements across the multiple countries in the region. Unifying and integrating these specialist systems is crucial for ensuring a 360-degree view of the total client relationship. This enables advisers to support clients across various business areas, including investment advisory, portfolio management, custody services, and even retail, to support their clients along the wealth continuum.

By Avaloq’s Akash Anand, regional director and head of the Middle East and Africa