The COVID-19 pandemic that has hit nearly every corner of the world has had huge repercussions for individuals and communities, businesses and economies. The after-shocks beyond the immediate health emergency are already clear: market volatility, asset class shifts, new swathes of corporate debt, entry into a possibly prolonged recessionary period.
Nevertheless, significant opportunities also exist. There are still vast amounts of capital available for investment, huge and growing markets in China and other parts of the east, and exciting possibilities through greater digitization and emerging technologies. Distressed assets are also coming to market and providing another area of opportunity for investors.
For the asset management industry, these conditions create a challenging environment in a market that was already undergoing significant change. In recent years, new regulations (e.g. MIFID) have increased pressure on margins, the yield from traditional asset classes has been reducing in a low interest rate environment, and the competitive landscape has become tougher through the entry of new digital and fintech players.
Through the height of the COVID-19, asset managers have focused on keeping operations running, ensuring the safety and wellbeing of staff, managing a mass transition to remote working, and communicating proactively and frequently with clients. Continuity, reassurance and transparency have been the watchwords.
Asset managers have proven their resilience and must now review and revitalize their businesses to recover strongly and get fit for the future.
KPMG professionals have identified six key themes that we believe will be critical to the asset and wealth management industry as they ready themselves for the New Reality. We discuss the implications and actions arising out of each of these, together with relevant supporting insights.
- Redefining business and operating models
- Accelerating digital, transforming through technology
- An evolving risk and regulatory landscape
- Redesigning the future of work
- Embedding ESG across the investment approach
- Look East: navigating business opportunities in China
As we approach a defining period in the wake of potentially the biggest global shock in a generation, leaders in the asset management industry should seek to ensure they set a clear, decisive and actionable strategic agenda to steer their organization to future success.
As we continue to navigate our way through COVID-19, there will continue to be frameworks and processes created. Asset Management organizations who are able to navigate through the recovery with an eye on the new reality stand the best chance for a bright future.
Asset Management will be a technology driven industry and will be critical in helping shape a new economy based on sustainable business.
Global Head of Asset Management and
Global Chair of Real Estate and Construction
Regional Senior Partner and Vice Chairman
KPMG in China