In China, the coronavirus outbreak has resulted in a new wave of digital disruption that’s expected to have a long-term impact on wealth management, Cerulli Associates Inc. said in a release on Tuesday.
The accelerated disruption comes as clients isolated at home increasingly rely on the internet to make investment decisions. The pandemic has been “a catalyst to the growth of digital channels,” the Boston, Mass.–based research firm said in the release.
While this growth includes third-party online platforms, it also includes traditional channels like banks.
“Some big banks have shown their capabilities in providing an almost full-range of functionalities to customers remotely,” the release said.
Some smaller banks have started selling deposit products via third-party online platforms.
Firms have also been “aggressively” conducting online seminars, Cerulli said, which has resulted in several blockbuster fund launches in China so far this year.
The uptake in investing increasingly comes from younger clients using smartphones. Surveys conducted by the Asset Management Association of China (AMAC) found that 36.5% of retail mutual fund investors in China were younger than 30 in 2018 — almost double compared to 2013, Cerulli said.
And about 71% of retail mutual fund investors used mobile devices as their main investment tool in 2018, compared to only 21% in 2014, the AMAC surveys found.
Firms have responded to these trends. More than 50 asset managers and investment firms in China (including four foreign managers) have built wealth accounts on the Ant Fortune app, Cerulli said. The app is the wealth management platform of Ant Financial Services Group, an affiliate company of e-commerce giant Alibaba.
Firms are also building profiles on digital platforms that aren’t strictly financial, such as Himalaya, a popular podcast app in China.
In the release, Ken Yap, managing director for Asia at Cerulli Associates, urged managers to take heed of the latest developments and look for ways to harness digital networks.
“Rather than being a temporary outcome of the coronavirus outbreak, the ‘digitalized human touch’ could have a long-term impact on the industry,” Yap said.