PwC: Wealth Managers Are Too Complacent with Fintech
Most wealth and asset managers are afraid they’ll lose business to financial technology companies, yet too few realize they can use that same technology to fight back, according to a recent report from PwC.
While 60% of wealth and asset managers fear losing ground to fintech firms and 61% are particularly concerned about fintech's squeeze on their profit margins, 17% believe there’s nothing to fear at all, which is the highest for the financial services industry as a whole, according to a worldwide survey of 544 primarily C-suite respondents in the financial industry, including 163 wealth and asset management respondents, conducted by PwC.
Among wealth and asset managers who do engage with fintech in some way, the majority (69%) believe it can help them cut costs, 60% think it can help with differentiation and 43% think it can bring new revenue, PwC writes. But a third of wealth and asset managers (compared to a quarter in the financial services industry as a whole) don’t engage with fintech in any way, according to the report.
The sector is behind the rest of the financial services industry, with only 31% of wealth and asset managers currently offering a mobile application as part of their services and just 14% currently working on one, PwC writes. That’s despite 78% of respondents firmly believing that 40% of their clients will be using mobile apps at least once a month within the next five years, according to the report.
On the other hand, an overwhelming majority (90%) of wealth and asset managers do believe in the power of data analytics to both process data and help manage risk and compliance, according to the survey. But PwC writes that fintech can help firms in several other aspects: automation of asset allocation, for example, can both improve the customer experience and cut the costs of client onboarding, the company writes.
By virtue of their trustworthiness, asset and wealth managers also stand to benefit from combining the digital experience with the human element to become data custodians, according to PwC.
“Those who cling to business as usual, focusing on manual operations, pure investment management and siloed client data, should expect their market share to diminish at an increasing pace,” the report says.