FinTech vs. Asset Management firms: Competition or collaboration?

By Charity Ip – Senior Consultant, Asset Management Recruitment, Links International Hong Kong

As a specialist recruiter for finance jobs in Hong Kong, with a special focus on Asset Management jobs, I am naturally very interested in Financial Technology – or FinTech.

With the advancement of technology and globalisation, FinTech companies are on the trend of growing success and look promising. This draws the attention of traditional Asset Management firms as to how these new players may affect their business.

FinTech firms are considered disruptive

Unsurprisingly, traditional Asset Managers are wary about the emergence of FinTech companies and view them as disruptive elements. According to a survey from the CFA Institute conducted in April 2016 on FinTech, Asset Management firms were selected as the sector that will most likely be affected by FinTech. The respondents also reflected that FinTech will likely replace human advisers for the mass affluent group, but not for the ultra-high net worth group. Does this necessarily indicate that FinTech will take over traditional Asset Managers?

How did FinTech emerge?

The success of FinTech originates from the 2008 Global Financial Crisis, when banks were pulling away from lending, whilst these FinTech start-ups were able to capitalise on that opportunity and thus delivered competitive products. FinTech offers a wide range of services including peer-to-peer lending, crowdfunding, mobile payment apps, FX platforms, trading platforms, and so on. All of these services aim to simplify, streamline and enhance the existing financial services processes.

Competition or Collaboration?

The external FinTech competition, coupled with the internal criticism for overcharging and under-delivering, have put traditional Asset Managers at a disadvantaged position. They are worried that FinTech companies will take up their market share, businesses and, ultimately, their jobs.

However, instead of viewing FinTech as a competitor, it would be better for traditional Asset Managers to collaborate with these emerging technologies. With reputable banks gradually adopting innovations like online banking, mobile banking apps and so on, it is time for Asset Management firms to follow suit. Technology advancement is an inevitable trend; to go against it would be an unwise decision and would likely result in big failure. Customers and investors nowadays are expecting more tech-smart ways to manage their money and assets. Therefore, Asset Managers should embrace the emergence of FinTech start-ups and take this opportunity to enhance their services. This could help to strengthen their market position and make them more appealing in the eyes of the general public.

Instead of being considered competitors, FinTech could actually provide an opportunity for Asset Management firms to ‘renovate’ their business and truly deliver value to investors.

For more advice on how to build your career in Asset Management, please do not hesitate to contact me.