Wednesday, 19 June 2024

Philippines can unlock wealth management by leveraging digitalisation, demographics

5 min read

By Urs Bolt

The booming wealth management sector, driven by digitalisation and a youthful population, is primed for transformation, offering lucrative opportunities for tailored, tech-savvy financial solutions

The Philippines is thriving, and propelling wealth growth that demands comprehensive financial services. Current trends, notably among the emerging affluent, will shape the future of wealth management here, with digitalisation playing a crucial role.

The demographics of the population—exceeding 46 million—play a significant role in the future wealth management market. Millennials, born between 1981 and 1996 and Gen Z born between 1997 and 2012, collectively comprise over 56% of the population.

Currently, the largest segment is the mass affluent located at the high end of the mass market. They are individuals or families, often called Overseas Foreign Workers returning to their homeland, and professionals including employees of foreign companies in the Metro Manila region. With a household income of $100,000 to $1,000,000, and often over 50 years of age— Gen X and Boomers—mass affluents have agrowing demand for wealth services. The demographic factors highlight the necessity for diverse and easily-accessible solutions.

AUM to reach $121 billion in 2023, $141 by 2027

The wealth foundation in the Philippines is still low but growing at a faster pace compared to many other markets. In 2023, the projected assets under management (AUM) in the wealth management sector are expected to reach PHP 6.8 trillion ($121 billion), according to Statista Wealth Management. The forecasted compound annual growth rate from 2023 to 2027 of almost 4% suggests an estimated market volume of PHP 8 trillion ($141 billion) by 2027.

The wealth management market in the Philippines features a diverse clientele. Traditionally, it revolved around high-net-worth individuals (HNWI) and ultra-high-net-worth (UHNW) clients. The country’s wealthy are served by both local and international players. Some prominent local financial institutions are Metrobank, BDO Private Bank, RCBC, Security Bank, BPI Asset Management & Trust Corporation and Union Bank, and international institutions operating offshore.

Some local financial institutions have a strong presence and a long history of serving UHNW clients in the country. The typical services offered are investment management and advice, finance, estate and inheritance planning, investment-linked life insurance solutions, trust structures, succession planning, and increasingly, family office and philanthropy solutions, and offshore options. 

Recently, new players and digital platforms, including payment wallets and super-apps such as GCash and Maya, have surged in the Philippines. These technology-driven services cater to a broad audience, facilitated by the ease of onboarding through the Philippine Identification System, the national digital identity scheme, and will significantly influence the expansion of financial services into wealth advice.

Digital natives constitute the largest segment

Given the demographics, digital natives constitute the largest segment for consumer products and services. Their inclination towards social media and the use of superapps via smartphones positions digital platforms as the primary channels for accessing, communicating, and distributing financial services and products. The demand for wealth advice among mass affluent customers is growing at a high rate. They seek personalised, tech-savvy solutions aligned with their financial goals, expecting a seamless customer experience.

To cater to the expanding affluent investor class in the Philippines, prioritising know-your-client procedures is essential. This ensures that customers are invested in products not only suitable but also tailored to their specific needs, ensuring investor protection through adherence to detailed risk profiling and following regulatory best practices.

Harnessing potential of mass affluent investors

A digital wealth solution for the Philippines seamlessly integrates onboarding, identity verification, risk profiling, investment management, lifecycle processes, and customer interaction. This is achieved through a modular, cloud-based microservices architecture, using standard interfaces like application programming interface (API) based on open banking and open wealth standards. Embedded wealth management, achieved via API-enabled service unbundling, can serve the needs of affluent investors at the point of need for a financial product or service.

While sharing common goals and technology with conventional wealth services, embedded wealth management stands out by promoting savings and investment over consumption or speculative trading. Leveraging data not only enables tailored services, facilitating a shift from a product-centric to a needs-based approach, but also positively impacts the customer experience. Whether purely digital, human-centric, or a hybrid model, with local relevance addressing the unique requirements of Philippine investors, the focus is on providing a superior customer experience.

The dynamic evolution of the wealth management market in the Philippines, propelled by shifting demographics and technological advancements, places the country on the verge of industry transformation. The central role of digital capabilities, coupled with a strong commitment to innovation, adaptability, and an embrace of emerging trends, sets the stage to fully harness the vast potential within the mass affluent segment in the Philippines.


Urs Bolt is an independent wealthtech advisor. He is a 35-year veteran in finance, focusing on digital banking, wealth management, risk, regulation and fintech.

Institution: Metrobank, BDO Private Bank, RCBC, Security Bank, BPI Asset Management & Trust Corporation, Union Bank, GCash, Maya
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