Back to Insights Page

Digital Asset Management rises profit margins

By Stephan Mayer

Asset management is under pressure. In addition to challenging market conditions, growing competition from low-cost index products is also gnawing at the margins of fund providers.

Due to technological advancements in Big Data, Artificial Intelligence and Blockchain more and more FinTech solutions point out how profit margins can be increased in fund distribution through digital asset management.

Influence of technological change Although the global financial industry has been digitizing its processes for some time, the development in traditional asset management has so far been little visible. In contrast to payment transactions (Apple Pay), credit cards (Revolut) or mortgages (Hypomat), the influence of technological change in asset management has so far remained modest.

According to a study conducted by PwC in October 2018, the margins of asset managers fell by almost nine percent between 2012 and 2017 and should fall by a further 20 percent by 2025. Increased competition, rising regulatory costs and the growth of passive investment products (ETFs and index funds) with their low fees are in charge of this development.

FinTech cooperations This situation is the reason why new forms of cooperation are being sought, for example in the form of cooperation with independent digital asset managers, so-called Robo Advisors. The collaboration between digital asset managers and established asset managers shows that a fund provider can open up new markets without compromising existing institutional channels.

Thanks to FinTech cooperations, fund providers can use their resources specifically in the more intensive advisory process for larger private and institutional clients. Both parties can benefit from this, as they can fully exploit their respective core competencies and make profitable use of them. Fund providers find an efficient and cost-effective distribution channel for end investors in cooperation with digital asset managers, and the Robo Advisor benefits from tried and tested model portfolios, which increases the credibility of the digital platform. A true win-win-win situation that benefits investors, asset managers and the digital platform alike.

Asset management is facing a "disruption" of proven models through new technologies. So, the only way to address these challenges is to take the initiative to lead change, which means investing in innovative technologies. Established asset managers should think about cooperations with Fintech companies, especially in order to acquire technological know-how and benefit from digital asset management opportunities.

Insights

Warning regarding "acolinFX.com"

ACOLIN warns against responding to an offer on the website www.acolinfx.com which purports to originate from ACOLIN Europe AG. As a precaution, we recommend that you refrain from visiting this website. Neither ACOLIN Europe AG...

Read More

New starter interview: Roxana Mahboubian

Roxana joined the business in July 2021 to help drive and execute ACOLIN’s growth plans in the UK. Previously, Roxana held Business Development roles at Morgan Stanley Investment Management, Fitch Ratings and Fitz Partners as...

Read More

CISA, FinSA, FinIA: Assessment on the new legal landscape in Switzerland

Since the beginning of 2020, the new financial market regulations, FinSA and FinIA, have been in force in Switzerland. This affects investment and asset advisors, asset managers and collective asset managers, as well as all...

Read More

Can investors capture a hedge fund's “Golden Hour”?

Investment funds exist for one reason and one reason only. To exploit perceived price inefficiencies in any market and generate alpha for investors. Occasionally, exceptionally good performance is rewarded with attention from...

Read More

Send Us a Message

For any inquiries, please fill in the following contact form.