Saudi Arabia Wealth Management: Solutions to Operations Challenges

The Saudi Arabia wealth management industry is developing rapidly, and to support that growth, firms need a sound and stable operation.

It really is an exciting time in the wealth managing space in the Kingdom.

Consider these Saudi wealth stats:

  • KSA has the largest number of millionaires in the Middle East with 224,000 people. (Capgemini).
  • The Kingdom is predicted to have  a compound annual growth rate in new wealth of 4.8%, rising from $1.3 trillion to $1.6 trillion from 2021 to 2026. (Boston Consulting Group)
  • The ultra-high net worth population  ($30 million or more in assets) is expected to increase by 20% to 8,416 between 2020 and 2025. (Knight Frank)
“In Saudi Arabia, … the number of UHNWIs increased by 9.6% (between 2020 and 2021), the 10th fastest growth rate globally. As the region continues its various economic diversification programs, we believe that the number of HNWI, UHNWI and billionaires residing in the region will grow significantly.”

- Taimur Khan, Head of Research, Knight Frank Middle East

Vision 2030: A Driving Force in Saudi Financial Services Modernization

Led by Prince Mohammed bin Salman (MBS), the Kingdom is undergoing a dramatic economic transformation.

Heavily reliant on oil and gas export revenues, the country is ambitiously developing and diversifying all sectors of the economy, including tourism, real estate, entertainment, and financial services.

Global firms like Brookfield Asset Management have recognized opportunity that comes with a presence in Saudi Arabia:

“We want to be at the heart of the Kingdom as it grows.”

- Bruce Flatt, CEO, Brookfield Asset Management

There is a lot of positive change, but Saudi Arabia wealth management firms must change with the times to reap the rewards.

Addressing Operational Inefficiency and Outdated Practices

The COVID-19 pandemic and technology advances have exposed the weaknesses and challenges Saudi wealth management firms face.

When pandemic travel restrictions went into effect, it became harder to bring in wealth management back-office talent from abroad. Additionally, having everyone at a physical office space during lockdowns was another struggle.

As for technology, advances in digitization, automation, and machine learning allow for greater efficiencies, but many wealth managers in Saudi Arabia have not made full use of the technology. Failure to adapt will put firms at a huge disadvantage.

Saudi Arabia Wealth Management Operational Solutions

Outsource

Hiring in-house is a challenging task for many firms. It’s a constant struggle in people management as employees come and go, and then there is the added struggle of relocating talent from abroad. They come to Saudi Arabia and need housing, transport, and work setups arranged.

Saudi wealth firms can bypass all the hassle by partnering with a back-office outsourcing provider like Empaxis that will recruit, hire, and train talent for them.

As many wealth managers do outside Saudi Arabia and the GCC region, they leverage offshore talent. Firms do not require then outsourced team to be physically present in their office. As long as they are remotely present and work from a secure facility over a secure online connection, then wealth managers can do a lot with outsourcing.

But if firms still require their talent to be physically present at their office, Empaxis can help arrange that talent to come to Saudi Arabia.

Either way, one must do their due diligence and ask the right questions before select and with an investment management outsourcing provider.

Automate

This is a huge opportunity for wealth managers.

They often employee armies of staff to manually input and aggregate data into Excel spreadsheets and portfolio accounting systems.

Many of these tasks — be they ZATCA invoicing, performance calculations, reconciliation reporting, or billing — can be streamlined with automated bots.

If the work involves manual, predictable, and repeatable steps, then an automated setup is the perfect solution.

Saved time, saved money, and better work outcomes are the main benefits, and Empaxis has years of experience implementing automation technology for wealth managers.

AI

Artificial intelligence is still an uncharted frontier, and while there are concerns about its usage in the workplace, the technology can still be applied in a way to aid in human efforts:

  • Investment research
  • Forecasting
  • Portfolio allocation
  • Risk analysis
  • Client communication

Over time, an increasing number of Saudi wealth managers and banks have embraced the tech.

The KSA Robo Advisory Market grew at a compound annual growth rate of 607% between 2019 and 2022 in terms of revenue generated, and this market is estimated to grow at a positive CAGR of 52% in between 2022E and 2026F.

Don’t Forget About Humans

The technology is getting smarter, but there are inevitably tasks that automation and AI can’t do entirely.

These tools will perform functions humans no longer have to do, and what means is human talent should be positioned where that human talent is needed most

This could be :

  • overseeing the data and reports; high-level analysis and decision-making
  • putting the finishing touches on deliverables
  • communication with clients and stakeholders
  • performing any task that is so unique that machine learning or automation cannot serve as an adequate replacement

And in these cases, Saudi Arabia wealth management firms can determine what human activities are best performed in-house or outsourced.

A Bright Future for Wealth Managers

The Saudi wealth managing industry is in clear growth mode.

Rising levels of wealth and investment opportunities in the Kingdom are paving the way for a truly bright future in the sector, but only the firms that adapt to change can truly benefit.

Leveraging third parties for outsourcing and automation are great ways to help boost operating efficiency and reduce costs.

Wealth managers in Saudi Arabia would be served well to make these changes, and Empaxis is ready to assist.

Chat with an Expert

Get the latest in financial technology support, AI and digital transformation and investment operations outsourcing

Our monthly newsletter features helpful resources, articles, and best practices to implement within technology providers and investment firms