It is an exciting (and nerve-racking) time for investors around the globe. The industry is evolving exponentially. One of the catalysts responsible for this evolution is technology. New innovative products are being launched and asset management firms are embracing digital technology to enhance their offering. Competition has never been this tough. But, with an eye on what is happening globally, asset management firms must adapt or face the consequences.
Here are our Top 10 Global Trends for 2019:
1) Optimising the business and operational model
CEOS are questioning their current business and operating models to achieve their strategic and financial goals. Some executive teams have taken a step back to re-examine the financial goals defined for the business, the strategy employed to achieve them and the models in place to deliver that strategy.
2) Governance and risk
Senior management are challenging management information – particularly investment risk reporting – in order to make more informed business and strategic decisions. Investors are more inquisitive about corporate governance and risk management procedures conducting extensive due diligence over managers’ operations before they commit to any investments.
3) Think big data
Big data is being transformed into tangible value for astute investment managers. The analysis of big data can assist with a range of predictive capabilities including predicting tax and regulatory impact when entering new markets. At the same time cyber security remains a challenge placing data privacy and protection high on the agenda.
4) Client experience is everything
There is an increasing focus on the client at the heart of the business, particularly on the client journey and experience. Each interaction is being deconstructed into “moments that matter” with adoption of technology to enhance client on-boarding or reporting, for example.
5) Widening the regulatory scope
There is still increasing regulatory oversight, particularly related to systemic risk and investor protection, such as leverage and costs. There is also growing demand from stakeholders like government, regulators and investors to deliver on non-financial concerns, like diversity, ESG, and so on.
6) The real value in tech
More asset managers will connect their technology dots in ways that unlock an entirely new level of agility, efficiency and value. This will range from with basic cloud enablement while leaders will likely create roadmaps and execute strategies that drive improved integration across the back, middle and front office.
7) ETF players become more active
The Exchange Traded Fund (ETF) market will be an important part of the digital product offering with more active players entering the ETF origination market. Expect more development of active ETF and specialist product offerings, which represents a future channel of growth.
8) Disrupt or be disrupted
The emergence of new technologies are filtering through different parts of the value chain from front end client interactions to back end efficiencies. Robo-advisors will continue to penetrate the client base, creating new customers and shifting assets away from asset managers, unless they provide a compelling value propositions.
9) Cyber and data security
The threat level around security is increasing I and asset managers are some way behind addressing this versus other financial services providers. Investment into security solutions is expected to increase, given the frequency of attacks on digital assets like wallets and exchanges.
10) Sustainability measurement gets more sophisticated
Environmental, Social and Governance (ESG) are priorities are increasingly on the asset management agenda. Expect many to place much greater focus on integrating ESG data points into their investment processes and client reporting.
KPMG Matchi has already identified fintech solutions per opportunity area within the asset management industry. This includes tools that assist with educating and engaging with clients. There are alternative business models available that make use of crowdsourcing and different revenue models. When it comes to data analytics, we’ve identified solutions that make portfolio monitoring and risk management more efficient. Wasting time with admin is old news with new back office tools for efficient processing and client support.
Our team helps clients leverage emerging tech, in order to deliver on strategic business objectives. If you’re in asset management, get in touch today.