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A steady influx of new competitors and investing alternatives are driving Canadian asset managers to invest in new innovative technology to improve the client experience, according to KPMG’s 2018 Canadian asset management industry opportunities and risks report published Thursday.

The report is based on collected insights and perspectives from asset management industry stakeholders across the country regarding the challenges impacting their organizations and the industry as a whole.

“Evolving customer preferences and increased demand for digital services are transforming the asset management industry,” says James Loewen, partner and national sector lead for asset management, KPMG in Canada. “This is a massive wake-up call and asset managers in Canada are answering by turning to technology to modernize their operations and services, and ultimately upgrade their client experience in an increasingly competitive marketplace.”

The report finds that 65% of firms believe that deepening their relationships with their existing client base by better serving their needs is the best way to hold their ground against the competition.

Companies are primarily looking to technology to upgrade their clients’ experience. Indeed, 80% now plan to “invest in/or explore partnerships to integrate technology into their strategies”, the report states, up from just 20% last year.

“There’s certainly a focus inwards on enhancing the client experience and most are doing it through technology,” says Peter Hayes, partner and national leader for alternative investments at KPMG. “There’s a real push to give clients more transparent and flexible access, be it through new online channels, point-and-click services or automated news functions. Companies see these as opportunities to keep their clients happy and stop them from switching.”

At the same time, the industry is also wary of forces such as the evolving regulatory environment and cybersecurity, which it sees as key risks.

“We’re going to see regulations that place more of a burden on intermediaries in terms of better understanding their products and customers. That, in turn, is going to put more pressure on manufacturers to help advisors become smarter about all the funds they’re offering, which may mean some of those products are going to be left out in the end,” says John Armstrong, national industry leader for financial services at KPMG.