Reluctance among asset management sector to adapt to technological advances
A new study from PwC has reported that Brexit and digital technology will reshape the asset and wealth management industry, although only 10% are investing in digital. Among global companies in Ireland, the value of the asset and wealth management industry is about to hit a high of $5 trillion. Despite this, only a few firms are ready for the technological change coming their way.
The PwC report also states that only 27% of CEOs are looking to collaborate with entrepreneurs or start-ups, pointing to an industry wide reluctance to innovate. By comparison, 23% of financial services players, 31% of banking CEOs and 37% of insurance leaders have plans in place to improve digitally. Strategies such as working with fintech companies to develop new products and business models may transform their sectors.
The five biggest concerns for CEOs in the asset management sector are the availability of key skills (71%), the speed of technological change (66%), changing customer behaviour (64%), lack of trust (61%) and cyber threats (59%).
Commenting on the report, Andrew O’Callaghan, leader of PwC’s EMEA asset and wealth management practice, said: “Confidence is high, but the sector is showing signs of being slow to innovate and adapt, particularly to technology and demographics. There are likely to be more mergers, not only because firms are seeking scale and distribution leverage, but also as some seek to break into new markets through buying talent and teams.
“PwC’s latest forecast for the total global industry assets under management is $101.7trn by 2020 –and notwithstanding the geopolitical uncertainties, the global asset management industry is confident it can continue to achieve future growth.
“In particular, with over 100,000 highly skilled professionals working in financial services in Ireland along with a large diaspora, many of whom will no doubt look to return, PwC is confident that Ireland has the capacity to deal with any relocation from the UK to Ireland as a result of the UK leaving the Single Market.
“However, the sector needs to rethink the relevance of some of the services it provides to its clients, from big financial institutions to pensioners, and take a longer-term perspective,” O’Callaghan said.