Fintech Strategies to Grow as Managers Seek Asian Assets

Shu Mei Chua, Associate Director at Cerulli

Shu Mei Chua, Associate Director at Cerulli

Product calibration has been the key area as asset managers work to get more creative in light of a tighter regulation. However the ubiquitous rise of financial technology is now becoming a core business tool. 

Asian asset managers are increasingly entering into strategic partnerships with other managers in the region as they look for various business strategies which could potentially enhance their revenue streams as cost pressures rise and competition stiffens.

Excluding Hong Kong and Singapore, most Asian markets are still inaccessible to foreign managers, with some markets, such as Taiwan and Korea, showing an increase in home bias.

Lack of Brand Recognition

This is one of the key findings of global analytics firm Cerulli Associates' newly-released report, Asian Distribution Dynamics 2016: «Responding to an Evolving Landscape

«An absence of distribution partners and lack of brand recognition are problems new entrants have to contend with and partnering with a local partner is seen as the best way to raise assets without a large initial investment, we expect strategic partnerships to get more creative in light of a tighter regulatory environment and the rise of financial technology,» said Shu Mei Chua, associate director at Cerulli.

Disruption Coming

Now however asset managers are looking to alternative methods of distribution in the region which is dominated by brokerages and banks. And a great many have decided that digital channels are set to play a big part in the next stage of distribution.

In fact, digital marketing has already made its headway in key markets in the region. Managers in China and India had the largest budget allocations to digital marketing among Asian markets and are using various digital tools to reach end investors.

Robo-Advisor Growth

One example is the use of messaging app WeChat to promote funds and provide investor education for managers looking to gain customers in China, noted Ivan Han, a senior analyst with Cerulli.

Han added that robo-advisors are possibly on the verge of disrupting the asset management industry in Asia in a positive way by concentrating the industry to now consider how to offer inexpensive, scalable advice to the majority of investors who are often ignored because they have smaller accounts.

«Robo-advisory is more of a distribution story in that it allows managers to tap capital from investors who had been reluctant to invest in mutual funds due to a lack of advice,» said Han.

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