The global asset and wealth management industries may be too complacent about the threat posed by upstart financial technology (fintech) firms to their businesses, according to a new report published by PricewaterhouseCoopers (PwC).
The report, which is based on the 2016 PwC Global FinTech Survey, finds that although 60% of asset and wealth managers think that at least part of their business is at risk to fintech, they also believe that it will have only a limited impact on their businesses.
According to the report, 61% of respondents expect increased pressure on margins, 51% are worried about data privacy, and 50% are concerned about losing market share.
Additionally, only 31% of asset wealth managers provide their clients with mobile applications, the report says, noting that his lags behind all other financial players.
“Banking and payments industries offer palpable examples of fintechs changing the financial sector by offering new solutions that are visibly disturbing traditional players. This should be an eye-opener for asset and wealth managers as they are next in line, while their fintech mind-set is still in its infancy,” says Julien Courbe, PwC’s Global FS Technology Leader, in a news release.
For example, 34% of respondents from the asset/wealth management sector do not yet engage with fintech companies at all, Courbe notes.
“Collaboration with fintechs is crucial and will be the only way for the traditional firms to deliver technological solutions at the speed expected by the market,” he adds. “We strongly believe incorporating fintech solutions will visibly strengthen their market position.”
Asset and wealth managers are choosing to invest in new technologies related to data analytics and automated asset allocation rather than expanding their digital and mobile offerings, the PwC report notes.
“With ‘robo-advisors’ becoming more sophisticated, they create an opportunity for asset managers to target the mass affluent who are looking for cheaper alternatives to receive advice on how to manage their assets. The key is to find the balance between human and technological interaction to create an omni channel experience at the speed expected by the market,” Courbe says.
The 2016 PwC Global FinTech Survey gathered the views of 544 respondents from 46 countries, primarily CEOs, heads of innovation, chief information officers, and other top management. The asset and wealth management results are based on 163 respondents from the sector.
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