Fintech for asset management companies

Abstract

FinTech is at the forefront of the financial industry’s agenda. Yet with growing challenges, how can Asset Management companies reap the highest benefits out of these new developments? The 2016 KPMG “Management Company CEO Survey” identified five key challenges for the industry that ultimately represent pressures on: costs, investments and digitalization. Through this project, KPMG aimed at understanding the FinTech trend by analyzing the existing market and innovative companies that offer solutions to these pressures. The best definition of FinTech, a concept prompted by the financial crisis, is “Innovation in Finance through the use of Technology”. FinTech has many applications for the complex processes and activities of Asset Management companies. The different types of FinTech identified as having a high potential for this sector can be broken down into five main categories: Blockchain, RegTech, Big Data & Analytics, Robotic Process Automation and Robo- Advisors. Each of them has a theoretical application to Asset Management companies. Through the survey, the type of companies that offer these innovative solutions were identified as often small in size, based in various locations and increasingly in the product commercialization or scale-up phase. Use cases for each of the companies propose clear descriptions of their application to Asset Management companies. From these, the main finding is that each of the categories often overlap to create a unique solution, making it hard to attribute on company to a specific category. This finding provided the basis for a convergence map, structuring theoretical and use cases for each of the possible overlap. Challenges of the innovative companies active in the FinTech sector mostly focus on the traditional nature of the financial industry. Asset Management companies should however embrace the FinTech revolution. It can provide them with a long-term economic sustainability and maintain their relevance in the market. Indeed, it will provide solutions that can release the pressures on costs, investments and digitalization.