KPMG: Competitors and alternatives driving Canadian asset managers
28 September 2018 Toronto
Image: Shutterstock
“Evolving customer preferences and increased demand for digital services are transforming the asset management industry,” says James Loewen, partner and national sector lead for asset management at KPMG in Canada.
Loewen made the comments in KPMG’s report, entitled ‘Canadian asset management industry opportunities and risk’, in which KPMG asked a number of asset managers their views on industry concerns and opportunities.
Loewen goes on to say the increase demand for digital services “is a massive wake-up call and asset managers in Canada are answering by turning to technology to modernise their operations and services”.
Some 65 percent are confident technology will improve their customer experience, and four out of five (80 percent) plan to invest in/or explore partnerships to integrate technology into their strategies, up considerably from one-in-five last year.
Peter Hayes, partner and national leader for alternative investments at KPMG in Canada, said: “There's certainly a focus inwards on enhancing the client experience and most are doing it through technology.”
Of the asset managers asked in KPMG’s report survey, some 85 percent said they were assembling their resources and talents to “tip the scales” in their favour, while 55 percent of CEOs asked said they had aligned middle-and back- office processes to reflect a more customer-centred approach.
When asked if middle office and clearing services platforms were elevating middle-office functions from cost centres to profit enablers, 50 percent said they “most definitely” agreed.
Some 85 percent of asset managers asked said they had, over the course of this year so far, enhanced their middle office and clearing services.
Though, Loewen, Hayes and Joseph Micallef, partner in financial services for KPMG, said: “This year’s survey results depict the Canadian asset management sector as a cautiously optimistic community.”
They added: “Leaders are both eager to adopt new methods and tools to strengthen customer ties, yet restless as ever about tightening market conditions, cyber risks, and the always-looming possibility of being out-innovated by their competitors.”
“While there is a drive to expand markets and attract new clients, the narrative in 2018 appears centred around existing customers and investing in technologies, channels, and trust-building measures.”
The partners also discussed how “the pressure to disrupt or be disrupted is intensifying”, and the pressures felt by domestic and international regulatory shifts have had a pessimistic effect on asset managers recent decisions.
The partners said: “Given the increased competition and the possibility of more prominent market entrants in Canada, it’s likely that the eagerness to innovate is taking a back-seat to fears of making the wrong moves and causing irreparable cracks in established foundations.”
These sentiments are mirrored in survey participants who listed the increasing complexity of the regulatory environment as the number one risk facing their organisations both now (58 percent) and into the years ahead (53 percent).
Georges Pigeon, partner, deal advisory at KPMG in Canada, said: “Regulators are requiring increasingly more from asset managers, whether product or information compliance. Asset managers are now addressing a community of investors and potential investors who want specialised products and more information.”
He added: “This has led to more complex products and more substantial reporting. Increasingly,
asset managers will weigh the cost versus benefits, and solutions will be required, so changes can be expected to level the playing field.”
The report also found organisations are not standing idle in the face of cyber threats.
Some 78 percent of respondents said they plan to install systems to detect and/or prevent cyber-incursions, while over half (58 percent) aims to establish a risk management committee to
address cybersecurity, and 55 percent intend to purchase insurance to protect themselves against such incidents.
Loewen made the comments in KPMG’s report, entitled ‘Canadian asset management industry opportunities and risk’, in which KPMG asked a number of asset managers their views on industry concerns and opportunities.
Loewen goes on to say the increase demand for digital services “is a massive wake-up call and asset managers in Canada are answering by turning to technology to modernise their operations and services”.
Some 65 percent are confident technology will improve their customer experience, and four out of five (80 percent) plan to invest in/or explore partnerships to integrate technology into their strategies, up considerably from one-in-five last year.
Peter Hayes, partner and national leader for alternative investments at KPMG in Canada, said: “There's certainly a focus inwards on enhancing the client experience and most are doing it through technology.”
Of the asset managers asked in KPMG’s report survey, some 85 percent said they were assembling their resources and talents to “tip the scales” in their favour, while 55 percent of CEOs asked said they had aligned middle-and back- office processes to reflect a more customer-centred approach.
When asked if middle office and clearing services platforms were elevating middle-office functions from cost centres to profit enablers, 50 percent said they “most definitely” agreed.
Some 85 percent of asset managers asked said they had, over the course of this year so far, enhanced their middle office and clearing services.
Though, Loewen, Hayes and Joseph Micallef, partner in financial services for KPMG, said: “This year’s survey results depict the Canadian asset management sector as a cautiously optimistic community.”
They added: “Leaders are both eager to adopt new methods and tools to strengthen customer ties, yet restless as ever about tightening market conditions, cyber risks, and the always-looming possibility of being out-innovated by their competitors.”
“While there is a drive to expand markets and attract new clients, the narrative in 2018 appears centred around existing customers and investing in technologies, channels, and trust-building measures.”
The partners also discussed how “the pressure to disrupt or be disrupted is intensifying”, and the pressures felt by domestic and international regulatory shifts have had a pessimistic effect on asset managers recent decisions.
The partners said: “Given the increased competition and the possibility of more prominent market entrants in Canada, it’s likely that the eagerness to innovate is taking a back-seat to fears of making the wrong moves and causing irreparable cracks in established foundations.”
These sentiments are mirrored in survey participants who listed the increasing complexity of the regulatory environment as the number one risk facing their organisations both now (58 percent) and into the years ahead (53 percent).
Georges Pigeon, partner, deal advisory at KPMG in Canada, said: “Regulators are requiring increasingly more from asset managers, whether product or information compliance. Asset managers are now addressing a community of investors and potential investors who want specialised products and more information.”
He added: “This has led to more complex products and more substantial reporting. Increasingly,
asset managers will weigh the cost versus benefits, and solutions will be required, so changes can be expected to level the playing field.”
The report also found organisations are not standing idle in the face of cyber threats.
Some 78 percent of respondents said they plan to install systems to detect and/or prevent cyber-incursions, while over half (58 percent) aims to establish a risk management committee to
address cybersecurity, and 55 percent intend to purchase insurance to protect themselves against such incidents.
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