Why 2025 will be a pivotal year for European wealth and asset managers

European wealth and asset managers must build a blueprint for success in a constantly shifting landscape.

In brief

• We set out the top 10 global resolutions for wealth and asset managers in 2025, and three stood out for European firms.
  
• To stay competitive in the ever changing landscape, wealth and asset managers must adapt to new realities, innovate products, and harness next-gen data.
  

Is the European wealth and asset management industry past its inflection point? It’s a question I often get asked by clients. The industry has certainly been through a period of rapid change, including geopolitical uncertainties, market fluctuations, and a high-interest rates environment. At the same time, it has catered to clients' appetite for diversification, the growth of private assets, and the continued progression of active Exchange Traded Funds (ETFs). We’ve seen established players struggle to maintain their competitive edge and new firms emerge from a raft of consolidation deals. Across the industry, margins are being squeezed and leaders are under constant pressure to do more with less.

So how can European wealth and asset managers build a blueprint for success in such a constantly shifting landscape? At the beginning of the year, we set out our top ten resolutions for wealth and asset management firms to help organizations survive and thrive. For me there are three that really stand out:

1. Adapt to new realities, pivot business models and build resilience

This is a business imperative. Companies can’t afford to stand still while market, client and staff expectations are endlessly evolving. To stay competitive, firms need to think more holistically about change: Are there any strategic partnerships that can expand their product and service offerings? What core and non-core capabilities could be outsourced to best-in-class providers, notably to get access to talent pools across the globe or to reduce the cost to serve clients? Are there lines across the value chain that could be merged?

Of course, this also necessitates getting the balance right between accelerating digital transformation and managing the operational risk that comes with it. This calls for close and constant scrutiny of the latest cyber security and regulatory frameworks. Take a regulation like the EU's Digital Operational Resilience Act (DORA) - since being applicable on 17 January, financial institutions are now required to have a comprehensive register of their contractual arrangements with ICT third-party service providers.

3. Modernize data to harness the power of Artificial Intelligence (AI) and other disruptive technologies

The EY 2024 European Financial Services AI survey showed that the industry is optimistic about the future of AI and Generative AI (Gen AI), with 63% of firms seeing GenAI as an opportunity to improve customer interactions, automate tasks, and personalize engagement.

The will is certainly there - 90% of firms have already integrated AI to some extent - but there is still some way to go – 36% of wealth and asset management firms feel they lag behind their peers, while 8% had not yet integrated it into the business at all. With AI critical to building a competitive advantage, accelerating adoption is an urgent priority if you want to keep up with the curve.

However, effectively harnessing the power of AI requires the right foundation. It needs a robust data infrastructure that is both standardized and secure, it needs governance and ethical frameworks, and most importantly it needs investment in upskilling your workforce. An EY survey found that 78% of firms acknowledge their workforce's limited experience with GenAI technologies, yet only a quarter have initiated new training programs. But the key question is, should firms wait to “fix” their data infrastructure before moving forward or should they start with “baby steps” and learn from these? This is a top-of-mind question for many wealth and asset managers.

Maintaining an edge during a time of intense competition and flux requires wealth and asset management leaders to lean into change. It is about strategically evolving business models, embracing emerging technologies, collaborating with the right partners to benefit from their expertise, and most importantly having the right talent - people who are fully invested in what the firm’s values are, what it is doing and where it is heading.