Catering to every investor: tailoring wealth management in the Middle East

As home to 212 millionaires with over US$100 million or more, and 15 billionaires, Dubai is one of the wealthiest cities in the world, while neighbouring Abu Dhabi has been recognised as a city ‘to watch’ for this list. Just short flights away are Qatar, with its impressively high per capita GDP of over US$87,000, and the cities of Riyadh and Jeddah, which are increasingly poised to be the wealth magnets of the Middle East.

In a region, recognised globally, for its above average level of wealth, it therefore comes as a surprise that the Middle East’s wealth management sector is largely underdeveloped. While high net worth individuals (HNIs), and family offices have been targeted by the region’s financial institutions, the larger segment of the population remains unpenetrated. This strategy does of course boil down to economics — the top 10% of income earners hold more than 60% of the total regional income. It has therefore made sense for service providers to maintain a narrow focus. A consequence of this has been an underwhelming level of digitalisation — after all, if HNIs almost exclusively rely on dedicated wealth managers, then why pour funds into developing digital systems?

Today however, there are new market factors at play. In just the last decade, Dubai has witnessed a 78% increase in individuals with liquid investment wealth of US$1 million or more. While not in the same league as their ultra-high net worth counterparts, these potential investors represent a significant opportunity. Moreover, over the next 5-10 years, globally, we’ll witness the largest transfer of wealth in the history of mankind. More than US$60 trillion in assets will be passed to a new generation, a group that’s a radical departure from those who came before.

Simply put, the current, manual, labour-intensive approach to wealth management cannot scale to accommodate the wants and needs of these emerging customer segments. Even today, investing in a mutual fund, or opening an investment account requires visiting a branch. Casting aside consideration for the staggering workforce investment that would be required to onboard thousands of retail investors in this manner, is this even likely to be their preference? 

If the region’s financial institutions hope to realise the new revenue streams these underserved segments represent, they must figure out how to economically serve them. Doing so will first require an understanding of what it takes to effectively (and efficiently) cater to the wealth management needs of different client groups.

Broadly speaking, it makes sense to divide potential clients into three segments. ‘Retail’ customers, with assets under US$1.5million, are the largest and perhaps most untapped of the lot. Given that volume dictates success here, serving these customers while controlling costs will require empowering them to self-serve as much as possible. Keep in mind however that many in this group will be making their first forays into the world of investing. So, offering them as much educational material as possible will go a long way, as will virtual ‘hand holding’ by heavily customising offerings based on effective segmentation and behaviour analysis.

Moving up the range, to between US$1.5million to US$5million, presents ‘Affluent’ investors. They are discerning of the experiences they receive and expect a premium level of service. While the greater per-customer revenue warrants the added level of engagement, it doesn’t translate to investing countless sunk hours. The solution then is to invest heavily digitising workflows and streamlining processes through automation. To offer them the ‘human touch’ without over-leveraging relationship managers, create a platform that delivers a ‘hybrid’ approach. This would present them with all the information they need digitally, while offering channels such as live chat and virtual calls, to conveniently connect them to dedicated relationship managers without the need for in-person meetings.

Finally, let's re-examine HNIs, the one segment that has thus far been the prime focus of the region’s wealth management endeavours, to understand why even here there is scope for improvement. While the high-touch, human-centric nature of client servicing will undoubtedly remain a hallmark of this segment, digitisation will still bring considerable value. Take investing’s many procedural tasks — collecting documents, get questionnaires answered, present investment proposals and so on. While customers may welcome in-person meetings to discuss investments and performance, they certainly won’t appreciate having to be physically present for mundane tasks such as signing an agreement or having documents scanned.

Moreover, across segments, digitalisation also doesn’t just translate to better customer experiences. It empowers employees and enables them to be more effective — whether that’s responding faster and more professionally or identifying opportunities for cross-selling and up-selling.

The region’s banks have recognised the value of digitalising their core operations, evidenced by the 52% growth the digital banking sector saw between just 2021 and mid-2023. Stopping here though would be leaving opportunity on the table. To seize the opportunity that digital wealth management presents, banks should first look for an engagement banking platform that can be layered on top of existing investments. This would enable them to play to their strengths and unlock the full potential of existing investments. For example, most banks would have already invested in industry-leading CRM systems, which are powerful tools for segmentation. Augmenting this with an engagement platform would empower them to take the next logical step and proactively push personalised offers based on rich data they already own.

To effectively cater to diverse investor segments — whether retail customers or high-net-worth individuals — banks need a flexible approach that balances speed and adaptability. Leveraging engagement platforms allows banks to deploy out-of-the-box solutions quickly while retaining the ability to customize specific features for unique market needs. For instance, banks can implement automated portfolio management and rebalancing for retail customers or offer advanced trading and order management systems for high-net-worth clients. This hybrid buy-plus-build approach empowers banks to deliver competitive offerings rapidly while maintaining the agility to evolve and create tailored experiences over time.

For most of its history, the wealth management sector used to be, by nature, an exclusivist and elitist field, targeted only towards the richest of the rich. But as the number of wealthy individuals increases and the definition of wealth continues to shift, the time is ripe for a big push towards inclusivity. By leveraging scalable engagement banking solutions, banks can tap into new revenue streams, build lasting relationships with emerging investor groups, and retain the human touch that remains integral to wealth management. Ultimately, those that adapt to these changes will position themselves as leaders in a rapidly evolving market, delivering value to clients across all wealth tiers