Predictions on Business Models for the Asset Management Industry

February 15, 2012

In December 2011, Roland Berger Strategy Consultants published an interesting study titled “Redefining asset management in new realities:  Leadership priorities for asset managers facing fundamental change.”  Since the report’s release, Roland Berger has been publishing analysis based on the detailed report, most of which is highly relevant for asset managers pondering the future of the industry. 

There are a ton of insights in the report, but there are two key points that immediately resonated with me.  First, the report focuses heavily on the attractiveness of emerging markets, particularly in Asia, the Middle East and Africa.  According to the report, AUM in Asia has been growing at 7% annually and this is predicted to continue.  The report asserts that asset management in these regions remains a “local business” and the firms that will be successful with offering “regionally tailored product portfolios.” 

Second, the report speculates on what asset management business models will perform well in the coming years.  Like other thought leaders, Roland Berger believes outsourcing operations will become more common, and that firms will push to develop scale.  At PORTIA, we’ve observed both of these trends, with the latter evidenced by the high volume of M&A activity among our clients and prospects.  But more interesting is the prediction that asset managers will increasingly specialize, especially for those firms that cannot compete on scale.

Of course, the firms in emerging markets with regionally tailored products are the most likely to grow through specialization.  PORTIA serves these firms particularly well, because we provide the broadest asset class coverage of any middle-to-back office solution.  And our multi-currency capabilities are second to none.  It’s no surprise that the world’s largest and most global asset managers choose PORTIA to manage their operations, and that PORTIA has been doing business in the Middle East and Asia for decades. 

Do you think specialization – both in size and scope – is the business model that will drive growth for asset management firms in Asia and other emerging markets?

 -Techee Cheung,  Business Development Director – Asia

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