Pushing ahead with digital and fintech adoption plans and establishing new distribution channels are key to the business growth strategies of asset managers in Southeast Asia, ex-Singapore, over the next three years, according to a recently published research report.

The report by Cerulli Associates also notes that asset managers see offering robo-advisory services to clients and using robotic process automation for back-end operations and big data for fundamental analysis as important to their future plans.

As well, about 43.5% of asset managers surveyed respondents say they expect their operating expenses attributed to digitalization efforts to increase to more than 5% in three years’ time. Currently, 41.7% of respondents say operating expenses attributed to digitalization efforts are less than 5% of their operating expenses.

Increasingly, asset managers and distributors in Southeast Asia, ex-Singapore, are using fintech and digital tools to reach out to a wider pool of investors, enhance customer experience in areas like client onboarding, subscriptions or redemptions, and boost direct-to-consumer capabilities.

While fintech continues to disrupt the whole financial industry, financial operators like banks are also getting into the game by investing or partnering with fintech start-ups or moving into virtual or digital banking.

In addition to direct online sales, managers say they would like to increase the usage of direct/tied agents for mutual fund distribution over next three years. The direct/tied agents channel, which accounted for 28.8% of mutual fund assets under management (AUM) in Southeast Asia, ex-Singapore, last year, saw the highest increase in distribution market share, followed by insurance and other channels, such as securities firms, independent financial advisors, and online platforms.

On the other hand, affiliated and non-affiliated banks, which accounted for about 54.1% and 8.3% of mutual fund AUM, saw a slight decline in distribution channel market share last year.

Despite this small decline, managers believe that banks are likely to continue to dominate fund distribution in Southeast Asia in the foreseeable future, as they are adapting quickly to the rise of fintech.