Since the outbreak of the Coronavirus pandemic, the global economy has been dipping down resulting in a decrease in most countries' revenue and market value and several laid off. The recent Russia-Ukraine war, coupled with rising inflation, and climate change are other factors that also put the economy under pressure.
Despite these challenges facing the global economy, the Middle Eastern Assets under Management (AuM) recorded an enormous growth of $100 billion from 2021 to 2022, a 7% CAGR increase, and is expected to reach $1.3 trillion, according to the latest data from Boston Consulting Group (BCG).
Unlike its counterparts in Europe and America, the asset management industry in the Middle East has arrived at a critical juncture, compelling leaders to reassess their organisations' operations to regain the profit growth they experienced in the previous years.
Boston Consulting Group estimates that given the existing pressures and market expectations if global asset managers stay the course, their annual profit growth will be approximately half the industry average of recent years.
To get back to historical levels, asset managers will need to cut costs by 20% overall and shift their revenue mix to generate at least 30% of their revenue from higher-margin products.
In fact, since 2006, 90% of revenue growth came from market performance, and in an environment where this is no longer guaranteed, it is now time for a real transformation, said Markus Massi, Managing Director and Senior Partner, at BCG.