Industry professionals say transformation is needed due to pressure from both regulators and clients
The wealth management industry is set for an increase in consolidation as pressures to transform drive change according to a new report.
Among the global survey of wealth managers, private banks, family offices, corporate services providers, and trust and fund administrators, more than 8 in 10 said that the industry is undergoing “unprecedented change.”
The poll was conducted by tech advisory firm TrustQuay and reveals that 59% of respondents expect more consolidation industrywide, with 41% expecting their own firms to increase M&A activity.
“The significance of this increasing consolidation and accelerating polarisation of providers between global consolidators and niche specialists cannot be underestimated and is driving a once in a generation change in the industry,” said Keith Hale, executive chairman of TrustQuay. “Our prediction is that in the next 5 years the industry will shrink from thousands of players to hundreds, coalescing around a small group of global players, alongside specialist firms who focus on a specific niche market or product offering,”
Hale added that, consequently, the current middle tier of providers will be squeezed into one camp or the other.
Transformation required
Dual demands of regulators and clients will also make digitization more essential with 9 in 10 respondents saying this will be needed to remain competitive.
Hale noted that the industry currently lags some other sectors of financial services in digital transformation. He expects interactive client portals to be one area that accelerates fast as part of corporate service and trust digital offerings.
“These portals should provide end clients with a secure but intuitive window onto all the rich data the service providers already have in the core system or systems,” he said. “With the ever-increasing demands of digital-native clients, it is impossible to think that those firms who don’t provide this access will have viable and competitive business models 5 years from now.”
While acknowledging the challenge that the industry has in implementing digital change, he believes that those that do will look back at 2020 as a turning point for future growth and opportunities in corporate services, trust and fund administration.
Read the results of our inaugural Future Focus Survey which examines the issues & opportunities for the industry moving ahead...https://t.co/7rmfYoAanJ
— TrustQuay (@TrustQuay) November 2, 2020
