More than two-thirds of asset managers expect their digital investments to increase in the next 12 months, according to KPMG
Asset managers prioritising front office for digital investment
HONG KONG, Jan. 7, 2020 /PRNewswire/ -- A significant majority (69%) of asset managers expect their spend on digital programs to increase 10 percent or more in the next 12 months, according to a KPMG survey of 72 top executives from the world's leading asset managers in over 20 countries.
KPMG's Getting Digital Right report indicates that over the past three years, digitally mature organisations have delivered 25 percent higher revenue growth, 31 percent higher growth in EBITDA and 11 percent higher net promoter scores.
In that same period, 72 percent of asset management executives said their firm spent between USD 0-50 million on digitisation, eight percent spent USD 50 million-USD 100 million, four percent of firms spent USD 100 million-USD 250 million and three percent said their digital spend had exceeded USD 250 million.
Bonn Liu, Partner, Head of Asset Management in ASPAC and China, KPMG China, said, "The asset management industry faces significant challenges from new competitors, shifts in preferences toward lower-fee passive investments, and rising costs and complexity of maintaining regulatory compliance. Getting digital right will sort the winners from the losers."
Front office functions were the biggest focus of digital investments, with 35 percent of respondents giving top priority to marketing, sales and distribution, while 32 percent prioritised their investment activities. Fifty-three percent of top executives rated these investments as 'high value'.
By contrast, just over one in five respondents put the most effort into digitising back office control and support functions (e.g. risk, compliance), and even fewer gave priority to middle office functions (e.g. operations). Only 42 percent of respondents said their investments for middle office functions showed 'high value', others either said they were of 'debatable value' or 'low value'.
Most top executives (38 percent) named "poorly defined benefits and target outcomes" as a limiting factor for their digital strategies.
Vivian Chui, Partner, Head of Securities & Asset Management in Hong Kong, KPMG China, said, "Asset management leaders need to have a clear sense of the benefits from their digital strategy and these should be clearly communicated across the entire organisation."
When asked what factors drove the success of their digital strategy, "having a clear vision for the program" was by far the most common answer (56 percent).
Neil Macdonald, Head of Wealth and Asset Management Centre of Excellence (CoE), KPMG China, said, "It's clear from our research that the digital winners have embedded digitisation in all their strategic and operational plans. For some managers, it may be time to press pause on their current digital efforts; taking time out to ensure that their digital portfolio is aligned with their business strategy and that their data program is providing a solid foundation for the effort is likely to increase significantly their chances of 'Getting Digital Right'."
About KPMG China
KPMG member firms and its affiliates operating in mainland China, Hong Kong and Macau are collectively referred to as "KPMG China". KPMG China is based in 23 offices across 21 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi'an, Zheng Zhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG's appointment for multi-disciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.