PwC survey finds many Asset & Wealth Managers are too lax about the FinTech disruption

As the FinTech revolution advances, many asset and wealth managers (AWMs) seem to be waiting for their marching orders. According the PwC’s Global FinTech Report, 60% of AWMs surveyed fear losing part of their business to FinTechs, yet 34% still do not engage whatsoever with these new entrants.


In the 1980s, AWMs were at the forefront of technology innovations, but today they seem to have become a dismissive lot. Even as FinTech makes disruptive inroads into their business, many barely take notice. During the emergence of online brokerages, wire houses gave the upstarts pejorative titles like "discount brokers", confident that these new business models would fail to take off.

But they have taken off. These new competitors have effectively commoditised trade execution, significantly dropping the price that companies can charge per trade. And the disruption continues. As innovations under the umbrella of "robo-advisors" become more sophisticated, FinTechs are expanding their services from mainly low balance accounts to include high net worth accounts. Going forward "robo-advisors" will also target the mass affluent in search of cheaper alternatives to investment advice.

Moreover, the growing popularisation of mobile access to deliver financial services is reshaping market expectations-AWM customers increasingly use mobile apps to conduct their business. Nevertheless, AWMs lag behind other financial sectors in the development of mobile applications: only 31% have an app, while just 14% are developing one. In fact, when asked about any type of threat, AWMs were the least concerned - the surveyed industry players believe FinTech will have only a limited impact on their business.

While some AWMs do engage with FinTechs, for the most part, incumbents seem to be offering the new entrants a frosty welcome, citing a variety of challenges for their misgivings. Over half of the AWMs surveyed said overcoming differences in management and culture presents the greatest challenge when collaborating with FinTechs. Differences in operational processes and regulatory uncertainty were also cited as major concerns.

While some AWMs do engage with FinTechs, for the most part, incumbents seem to be offering the new entrants a frosty welcome, citing a variety of challenges for their misgivings. Over half of the AWMs surveyed said overcoming differences in management and culture presents the greatest challenge when collaborating with FinTechs. Differences in operational processes and regulatory uncertainty were also cited as major concerns.

Figure 1: Highlights from the PwC Global FinTech Report 2016

highlights global fintech report Source: PwC Global FinTech Survey 2016

Figure 2: What challenges did/do you face in dealing with FinTech companies and vice versa?

highlights global fintech report Source: PwC Global FinTech Survey 2016

Despite the sceptical view many have, plenty of AWMs are investing in new technologies. Their interest tends to focus on data analytics and automation of asset allocation. Being able to capture, transform and analyse data is now integral to an asset manager’s ability to compete in the digital age. AWMs who do engage with FinTechs expect to see their costs reduced from doing so. FinTech oriented AWMs agree that technologically advanced solutions bring substantial opportunities: cost reduction is the number one gain expected from engaging with FinTechs (69%), while differentiation (60%) and additional revenues (43%) are also high on AWMs' lists.

In the new digital economy, AWMs should minimise their differences with disruptors and focus instead on the benefits they bring.

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