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Offering robo-advisory services to clients emerges as top priority in Cerulli’s survey of managers
May 2020, Singapore—Research from Cerulli’s newly released report, Asset Management in Southeast Asia 2020: Preparing for the Coming New Age, finds that pushing ahead with digital and fintech adoption plans as well as establishing new distribution channels are key priorities to support asset managers’ business strategies in Southeast Asia ex-Singapore over the next three years.
At the top of asset managers’ fintech agendas is offering robo-advisory services to clients. This is followed by the use of robotic process automation for back-end operations, and big data for fundamental analysis and monitoring.
About 43.5% of Cerulli asset manager survey respondents said they expect their operating expenses attributed to digitalization efforts to increase to more than 5% in three years’ time. Currently, 41.7% of Cerulli’s survey respondents said operating expenses attributed to digitalization efforts are less than 5% of their operating expenses.
Increasingly, asset managers and distributors in Southeast Asia ex-Singapore are using fintech and digital tools to reach out to a wider pool of investors; enhance customer experience—in areas such as client onboarding, subscriptions, or redemptions; and boost direct-to-consumer capabilities.
While fintech continues to disrupt the whole financial industry, financial operators such as banks are also getting into the game by investing or partnering with fintech start-ups or moving into virtual or digital banking.
“As banks join the fray of asset managers and robo-advisors vying for digital investment advisory marketshare, digital and fintech adoption are becoming even more important for asset managers’ growth,” said Shannen Wong, a senior analyst at Cerulli. “However, instead of competing directly with fintech startups, asset managers and distributors should consider partnership opportunities with them. Such pacts could help managers minimize their investment risk in new technologies and leverage the technical strengths of these startups.”
In addition to direct online sales, managers surveyed by Cerulli said they would like to increase the usage of direct/tied agents for mutual fund distribution over next three years. The direct/tied agents channel, which accounted for 28.8% of mutual fund assets under management (AUM) in Southeast Asia ex-Singapore last year, saw the highest increase in distribution channel marketshare among all channels, followed by insurance and other channels, such as securities firms, independent financial advisors, and online platforms.
On the other hand, affiliated and non-affiliated banks, which accounted for about 54.1% and 8.3% of mutual fund AUM, saw a slight decline in distribution channel marketshare last year. Despite this small decline, managers believe that banks are likely to continue to dominate fund distribution in Southeast Asia in the foreseeable future, as they are adapting quickly to the rise of fintech.
NOTES TO EDITORS:
These findings and more are from The Cerulli Report—Asset Management in Southeast Asia 2020: Preparing for the Coming New Age. In its 14th iteration, this annual report sizes and identifies opportunities and challenges in Southeast Asia ex Singapore five key markets—Thailand, Malaysia, Indonesia, the Philippines, and Vietnam. It provides insights into distribution and product trends, regulatory developments, profitability for selected markets, and operational strategies for asset managers in the region.
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