KPMG report: digital technologies radically reshaping investment industry

Business | Mon 19 Feb | Author – Business & Finance
Brian Clavin, Partner and Head of Asset Management, KPMG in Ireland

A KPMG and CREATE-Research report shows digital technologies are radically reshaping the alternative investment industry.

The Alternative investments 3.0 – digitise or jeopardise KPMG and Create-RESEARCH report was based on 125 hedge funds and private equity firms.

98% of respondents said ‘business as usual’ is not an option and at least three out of five they are still in the early stages of raising awareness with revolutionary technologies that could potentially change their business.

Less than a third said they are in the implementation phase for key innovations. Advanced technologies (e.g. blockchain) have only been implemented by 3% or fewer.

Brian Clavin, Partner and Head of Asset Management at KPMG in Ireland, said: “The alternative investment industry is facing significant disruption from digitisation, yet a majority of firms are not ready to implement key innovations that could potentially transform their businesses. The time to act is now. Alternative managers need to embrace change and seek new ways to gain a competitive edge, or risk being sidelined.”

The report also showed that respondents see growing cost pressures (58%), changing investor needs (51%) and fees and charges (30%) as factors that will accelerate the pace of digital innovation. Also client-driven factors such as end investors becoming more demanding (37%) and tech savvy (36%) were in the mix.

On the opposite side, holding back the pace of digitisation is cybersecurity (58%), legacy systems (43%), high costs (42%) and regulatory issues (39%).