Digital disruption to challenge Ireland’s $5trn asset industry

14 Mar 201720 Shares

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IFSC, Dublin. Image: Fireglo/Shutterstock

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Digital tech and Brexit will reshape the asset and wealth management industry, but only 10pc are investing in digital.

The value of the asset and wealth management industry among global companies in Ireland is about to hit a high of $5trn, but only a few players are ready for the digital tsunami coming their way.

A new study from PwC points out that many of the global businesses based in Ireland have treasury, asset and wealth management responsibilities in their portfolio.

‘With over 100,000 highly skilled professionals working in financial services in Ireland … PwC is confident that Ireland has the capacity to deal with any relocation from the UK to Ireland as a result of the UK leaving the Single Market’
– ANDREW O’CALLAGHAN

Approximately two-thirds of asset managers in the industry worldwide agree that technology will reshape competition in the next five years.

This is perhaps being influenced by the rise of fintech.

Asset management industry is reluctant to innovate

However, despite CEO concerns that the speed of technological change will threaten growth, only 10pc of asset managers are improving digital capabilities and skills.

Furthermore, just 27pc of CEOs are looking to collaborate with entrepreneurs or start-ups.

The report warns that the results point to the sector’s reluctance to innovate.

By comparison, 23pc of financial services players, 31pc of banking CEOs and 37pc of insurance leaders plan to improve digitally. Strategies such as working with fintech companies to develop new products and business models may transform their sectors.

The five biggest concerns for CEOs in the asset management sector are the availability of key skills (71pc), the speed of technological change (66pc), changing customer behaviour (64pc), lack of trust (61pc) and cyber threats (59pc).

“Confidence is high, but the sector is showing signs of being slow to innovate and adapt, particularly to technology and demographics,” said Andrew O’Callaghan, leader of PwC’s EMEA asset and wealth management practice.

“There are likely to be more mergers, not only because firms are seeking scale and distribution leverage, but also as some seek to break into new markets through buying talent and teams.

“PwC’s latest forecast for the total global industry assets under management is $101.7trn by 2020 – and notwithstanding the geopolitical uncertainties, the global asset management industry is confident it can continue to achieve future growth.

“In particular,  with over 100,000 highly skilled professionals working in financial services in Ireland along with a large diaspora, many of whom will no doubt look to return, PwC is confident that Ireland has the capacity to deal with any relocation from the UK to Ireland as a result of the UK leaving the Single Market.

“However, the sector needs to rethink the relevance of some of the services it provides to its clients, from big financial institutions to pensioners, and take a longer-term perspective,” O’Callaghan said.

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com