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Mustafa Bosca

Bahrain’s financial wealth grows to $69bn

MANAMA, August 3, 2021

Bahrain’s financial wealth grew by a Compound Annual Growth Rate (CAGR) of 4.9% from 2015 to reach a high of $69 billion in 2020. About 75% of this is investable wealth created at a time when Bahrain’s market showed resilience in the face of the protracted Covid-19 pandemic, according to a new report by Boston Consulting Group (BCG). 
 
The report, titled ‘Global Wealth 2021: When Clients Take the Lead’, reveals that despite the pandemic’s enduring financial impact, global prosperity and wealth grew significantly throughout the crisis and are likely to continue to expand significantly over the next five years, in line with the emerging economic recovery.
 
“Bahrain’s wealth has remained resilient despite the turbulent climate following the Covid-19 outbreak. This viewpoint is substantiated through the data, which illustrates growth over the past five years, with Bahrain’s Economic Vision 2030 supporting global economic activity. As a result, growth in wealth has been recorded, positioning Bahrain to make progress through 2025 and beyond,” said Mustafa Bosca, Managing Director and Partner at BCG.
 
Bahrain, which represented 3% of the Gulf Cooperation Council’s (GCC) financial wealth in 2020, is expected to witness strong growth of 3.6% CAGR to reach $82 billion by 2025, a $13 billion increase from 2020. Meanwhile, the region’s financial wealth is forecast to reach $2.7 trillion in 2025 from $2.2 trillion in 2020. 
 
A spotlight on onshore asset allocation shows that equities and investment funds (50%) accounted for the largest proportion of assets in 2020. Looking ahead, the allocation of onshore assets by 2025 is expected to be similar, with equities and investment funds set to be the largest share of onshore asset allocation in Bahrain, amounting to 48%. 
 
BCG’s report also shows Bahrain’s changing landscape of the wealthy in the coming years, with the rise of the next-generation affluent and high-net-worth clients. These individuals, between 20 and 50 years of age, have longer investment horizons, a greater appetite for risk, and often a desire to use their wealth to create positive societal impact as well as earn solid returns. Many wealth managers are not yet ready to serve these new ultras.
 
“Sustained economic achievements have led to new entrants among Bahrain’s wealthy. Because wealth is being distributed to more members of the population, it is likely that client demands and expectations will also shift as wealth demographics continue to experience change. With this in mind, those responsible for local wealth management will be tasked with proactively tailoring their offerings to local needs or younger wealth segments in due course,” concluded Bosca.
 
To win the new segment of the next-generation segment, wealth managers must bring a bold and new digital business model to life. The five pillars of the new digital model include:  
Supercharged Relationship Management: All of the legwork is done with the use of technology and relationship management to become the key support in the digital conversion funnel;
 
Contextual and Consumable Learning: Streamlined, gamified, 100% digital content, placed strategically to nudge conversion;
 
Smarter User And Experience Design: Simple to use platforms, enriched with tools and simulators that clients can play with;
 
Simplified Pricing: Hybrid model combining asset-based pricing with flat subscription fees; and
 
Democratised Access To "Haute" Investments: Customisable discretionary mandates, and scale-down of (U)HNWI products.-- TradeArabia News Service
 
 



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