Digital Rivals Cause Bank’s Fund Distribution Market Share to Slip
The emergence of low-cost digital fund distributors is challenging retail banks which will see their market share drop 5 percent in the next five years.
Retail banks held 40 percent market share as of 2019-end and this is expected to split to 35 percent by 2024, according to a recent report by global fintech firm Broadridge. In addition, asset managers are also resorting to direct sales and when combined with digital channels could result in a market share of 19 percent by 2024, from 2019-end’s 17 percent.
In light of the mass market disruption from digital entrants, Broadridge believes it will be more critical than ever to focus on segmentation to identify and focus on the highest revenue potential clients.
Banks on the Move
Retail banks are already making transformative digital moves en masse to prepare themselves for the evolving market. Even banks targeting high net worth and corporate clients have been focusing on more holistic digital offerings such as Bank of Singapore, Futon Bank and China Merchants Bank, Broadridge added.
«Customer segmentation and client journey mapping will be increasingly critical to distributors,» said Evonne Gan, Broadridge’s APAC insights manager and lead author of the report.
«High value, but high cost interactions, like meetings with relationship managers must be carefully targeted at the high potential clientele. Enhanced digital services will be used to service most of the other requests and clients.»
Asia: AM Growth Engine
In line with the global environment, growth is expected to slow for the asset management industry with Broadridge projecting a 10 percent CAGR in the next five years compared to 14 percent in the last five-year period. ETFs are expected to outpace mutual fund growth at around 11 percent.
Still, Asia remains the growth engine for the industry. According to the report, the region will be led by China (14 percent) followed by India (11 percent) and Indonesia (10 percent).
«We stand firm in our conviction that Asia will continue to be a future engine of growth,» Gan reiterated.
