Margin pressure forces asset managers to invest for the long term: CBI/PwC financial services survey, September 2015

Published at 11:31 AM on 30 September 2015

Optimism continues within the asset management sector, although the momentum has slowed, according to the CBI/ PwC financial services survey released today. Despite continued flows in to the sector, the recent poor performance of equity markets, driven largely by concerns around the Chinese markets, has dented overall confidence and sentiment in the market. Business volumes fell at their sharpest rate since March 2009 and investment intentions for the year ahead focus primarily on technology.

Total operating costs are rising and are expected to accelerate, alongside the average cost per transaction. In response, asset management respondents intend to authorise more expenditure on IT, predominantly to improve operational efficiency and customer engagement. On balance, there is also an increase in expected spend on mitigating cyber threats. Regulation also continues to drive system changes.

Mark Pugh, UK asset management leader at PwC, commented:

“The increasing pressure on margins is highlighting the need for asset managers to improve their operating efficiencies. Replacing legacy systems and building efficient end-to-end systems reflects a long-term investment within the industry, as they strive to compete in an increasingly competitive market. There is also a focus on distribution platforms, with asset managers asking themselves how they can develop their own platforms to retain more revenue. Improved customer engagement and experience is also a priority when investing in new technology.

“Regulation continues to drive system changes, but is starting to become business as usual. An intention to increase spend on safeguarding against cyber risks is not surprising and is in line with the wider financial services industry.”

On balance, asset managers view the growth of FinTech firms as a threat to profitability, with a large number of respondents also undecided on the impact these firms will have on the industry. Forming strategic partnerships will continue to be a focus for asset managers.

Mark Pugh, UK asset management leader at PwC, concluded:

“There is certainly a heightened awareness in the market of the threats emerging from both large existing retail and technology players as well as new FinTech entrants. However there is still a question as to whether these start-up companies achieve the necessary scale whilst grappling with regulatory compliance.”

Ends                                                                                    

Notes to editors

Mark Pugh is available for interviews. Please contact Ellie Raven on [email protected] or +44 (0) 207 804 3663

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About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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