Brexit preparations, macroeconomic uncertainty and cyber-security threats are 2017’s top three concerns for UK asset managers, according to the latest CBI/PwC Financial Services survey.
Despite these challenges, optimism has increased dramatically in the sector since September and expectations for growth are the strongest they have been in 18 months.
Employment numbers have improved since last quarter, with asset managers spending more on training and developing their people in response to ongoing regulatory scrutiny, including the FCA’s recent market study.
“As the UK begins its negotiations to leave the European Union, asset managers are aware their interaction with regulators will increase,” Mark Pugh, asset and wealth management leader at PwC. “It is vital the industry continues to work closely with both the government and the regulator to ensure all parties are aware of each other’s needs and expectations.”
Engaging in strategic alliances continues to be a business priority for asset managers facing continued competition established fund houses as well as new entrants.
“It’s been quite a year for the UK’s asset management industry but our survey shows future optimism remaining strong, with business volumes expected to grow,” said Pugh. “Between the opportunities analytics will offer for improved customer engagement and ongoing regulatory scrutiny, the industry is sure to have a busy year ahead.”
Back in November post-trade giant DTCC similarly identified the outcome of the US election and Brexit as among the top risks facing the global financial system. The firm’s latest systemic risk barometer shows rising concern cover the unpredictable nature of world events and sudden escalation that could cause global market volatility and instability.
Cyber risk remains the top danger overall, according to the DTCC survey, with 22% of respondents citing it as the single biggest threat to the industry and 56% rating it a top five concern.
Looking to 2020, respondents say improvements in process automation and data analytics are the biggest potential Fintech offerings – suggesting a continued focus on back office operations and improved customer interaction.
Experts at Boston Consulting Group (BCG) also warned the “dire consequences” banks face if they fall behind on fintechs, as reported by Global Investor in October 2015.
“Automation of more simple processes, such as recording client data on decentralised ledgers, for KYC and anti-money laundering purposes, is likely to emerge first,” noted BCG in a recent paper.