23 October 2017

Asset managers to face growing competition from big tech and retail firms

18 June 2014  |  8342 views  |  0 happy Family

Technology change and shifts in demographics could pave the way for digital powerhouses like Google, Amazon and Apple to become the next big players in asset management, asserts KPMG.

The global asset management industry will radically transform over the next 15 years due to seismic shifts in client demographics, technology and changing social values and behaviours, says the accountancy and consulting firm.

The report, 'Investing in the Future', predicts that by 2030 the client base of a typical asset manager will be completely different to today's, as generation X approaches retirement, generation Y matures and middle classes in emerging countries grow. KPMG warns that current business models will not be fit for purpose.

Ian Smith, financial services strategy partner at KPMG, says the clients of the future will be fundamentally different in terms of their needs and expectations. "They will demand more personalised information, education and advice that will require asset managers to radically address their technology capabilities to really understand their clients and support this level of service."

Asset managers still have a long way to go to recognise and exploit big data and data analytics, he says. A growing compliance burden aligned with a patchwork of legacy systems are distracting firms from building the new platforms required to serve the next generation of customers.

"New entrants, who aren't plagued by legacy issues and outdated clunky systems, will thrive as they can move quickly to implement more relevant digital and data strategies," says Smith. "Trusted brands that resonate and appeal to a more diverse client base, as well as the younger generation, may be able to build scale quickly. We could see the Apples, Googles or large retailers of the world becoming the next big powerhouses in investment management."

As such, KPMG expects to see mass consolidation in the industry and predicts that within 15 years there will be half the number of players currently in the market.

The report also predicts that most people will buy investment products on-line rather than through a face-to-face adviser. Customers will also buy based on their own research supported by crowd-sourced opinions on 'TripAdvisor type' websites.

Smith concludes: "The growing relevance of online communities and social networks is changing attitudes and behaviours. Consumers are increasingly looking to 'people like me' rather than professionals for advice, guidance and direction."

Similar sentiments are being expressed higher up the value chain in the latest edition of the World Wealth report from Capgemini and RBC Wealth Management. The report's Global HNW Insights Survey found that nearly two-thirds of the world's High Net Worth Individuals (ie those with $1 million in liquid assets) expect to manage most or all of their wealth relationship digitally in five years and would consider leaving their current firm if an integrated channel experience is not provided.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Brewin Dolphins takes £32m hit on IT implementation U-turn

Brewin Dolphins takes £32m hit on IT implementation U-turn

14 May 2014  |  4339 views  |  1 comments | 1 tweets | 1 linkedin
Investment management outfit SigFig raises $15m

Investment management outfit SigFig raises $15m

03 July 2013  |  3398 views  |  0 comments | 1 tweets | 2 linkedin
Nutmeg introduces private banking for regular people

Nutmeg introduces private banking for regular people

08 October 2012  |  7087 views  |  0 comments | 1 linkedin
Investment managers drive up tech spend

Investment managers drive up tech spend

25 January 2011  |  7101 views  |  0 comments
UK asset managers lack confidence in reference data quality - survey

UK asset managers lack confidence in reference data quality - survey

28 January 2010  |  7206 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
visit www.vasco.com visit www.innotribe.com

Top topics

Most viewed Most shared
Mastercard to roll out blockchain APIMastercard to roll out blockchain API
15568 views comments | 17 tweets | 30 linkedin
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
13650 views comments | 22 tweets | 28 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
10045 views comments | 12 tweets | 23 linkedin
satelliteGates Foundation backs Ripple collaboratio...
9955 views comments | 13 tweets | 10 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
8950 views comments | 9 tweets | 18 linkedin

Featured job

Competitive base + commission + benefits
Denmark, Finland, Iceland, Norway or Sweden

Find your next job