Technology is transforming all aspects of the financial services industry including asset and wealth management industry. Over the past couple of years, new companies have entered the industry offering advice based on artificial intelligence (AI) and big data, micro-investment platforms, or trading solutions based on social networks.
In Asia, the wealthtech industry remains underdeveloped when compared to markets such as the US and the UK, but the region is set to leapfrog its developed counterparts, fueled by its young, tech-savvy population, a rising middle class, as well as the ubiquity of mobile.
2019 is coming to an end and we look today as some of the top trends in wealthtech and asset management to watch out for in 2020.
Technology to play an even bigger role
Image: Financial charts, PxHere.com
By 2020, PwC predicts that technology will be critical to drive customer engagement, data mining for information on clients and potential clients, as well as operational efficiency and regulatory and tax reporting. By that time, most global asset managers will have a chief digital officer (CDO), the firm says.
Adoption of technology will be even more crucial as a younger generation of tech-savvy investors enter the scene, demanding cost-cutting solutions and applying pressure to fees and margins.
On the longer term, traditional asset and wealth management channels will eventually become near-obsolete and digitized offerings that integrate artificial intelligence (AI) and machine learning (ML) will be key for asset managers to create differentiated services and more efficient value chains.
Focus on online distribution
Image: People on mobile devices, PxHere.com
Emerging economies will leapfrog developed economies in the online distribution space, supported by populations that are more attuned to utilizing mobile as well as the ubiquity of mobile platforms in their lives.
In China, India and South Korea, online purchases and mobile phone use is rapidly increasing and already starting to surpass traditional channels, according to PwC.
By 2025, the firm estimates that online distribution will represent more than 50% of fund flows across Asia-Pacific (APAC). China is set to lead the trend with over 80% of flows being sold through online channels.
Robo-advisors continue to gain popularity
Image: Artificial intelligence brain Pixabay
Robo-advisors are expected to increase in popularity, driven by the entrance of younger generations into the landscape and the favorable regulatory environment in Asia around digital technology and fintech solutions to financial advice.
Already, in a number of markets in APAC, business-to-business (B2B) robo-advisors and platforms aimed towards the middle-class market are making inroads and partnerships with asset managers and banking distribution platforms are taking place.
According to PwC, adoption of robo-advisors will be even greater in Asia than in the US or Europe due to the younger, more tech-savvy population in the region.
Relationship managers still play an important role
Image: Business meeting, PxHere.com
Robo-advisors and automated solutions will reduce the need for human intervention in the wealth management process but that doesn’t mean that relationship managers will be out of work any time soon.
In fact, PwC says that these will still play an important role going forward for both high net worth individuals (HNWIs) and institutional investors. In the future, the firm expects a greater segmentation of and by wealth managers as clients are able, and willing, to pay differing amounts for service.
Middle and back office outsourcing
Image: Office work, Piqsels.com
In APAC, as developing regulatory requirements and a low-yield environment add pressure to costs and fees, asset managers have begun outsourcing or automating back and middle office functions to more efficient third-party providers.
Outsourcing of middle-office services is still nascent in Asia mainly due to a lack of established providers and a reluctance to give up control. The sector is however expected to see an upward trend over the next decade, representing a unique opportunity for providers.
Additionally, PwC expects that the growing use of blockchain in the industry will further alter accounting, trading, and asset servicing services and processes. New players will emerge and bring new technologies to the marketplace and leapfrog existing traditional providers.
No Comments so far
Jump into a conversationNo Comments Yet!
You can be the one to start a conversation.