Fund distribution via digital channels is on the rise in Asia Pacific, according to a Broadridge report, with China and its tech-savvy investors dominating the space.
Digital channels dominate fund distribution in China, making up 84 percent of the market by assets, according to a Broadridge report titled «APAC Distribution 360» (D360).
While banks maintain their leading position in overall third party distribution, their market share is steadily shrinking compared with rivals like top online distribution platform and fintech giant Ant Financial.
According to data from the Asset Management Association of China (AMAC), local lenders saw their market share by assets (excluding money market funds) fall from 58 percent in the first quarter of 2021 to 47 percent in the third quarter of 2022.
Local Adoption
In order to capture opportunities from China, global firms need to cater to local market characteristics and apply more resources in areas like online and mobile marketing, brand building and investor education. This includes efforts like the creation of an official home page in Mandarin or an official WeChat account.
«Global managers need to establish more effective marketing and communication tools to reach potential investors as mobile apps are the most common mode for fund buying. This allows managers to establish direct contact with end-investors to facilitate better communication,» said Evonne Gan, engagement manager at Broadridge’s asset management advisory as well as lead author of the report.
Digital Japan
While not as dominant as China, adoption of online distribution is also accelerating in Japan with a younger generation of investors.
Broadridge estimates that third party platforms account for 5-10 percent of assets distributed in the country with signs of continued momentum. For example, online platform SBI Securities has overtaken Nomura Securities in terms of account numbers.
«This has become a huge challenge for bricks-and-mortar distributors in Japan as online traders offer lower commission fees,» said Gan.
2027 Market Share
In the broader APAC region, third party online platforms have a market share of 17 percent, or $1 trillion. By 2027, Broadridge estimates that the channel will rise to 21 percent in market share with $2.2 trillion in total assets.
The firm notes that it has observed asset managers across the region upping their digital presence by using one of three approaches: acquiring digital platforms, building proprietary online platforms or partnering with digital investment services providers.
«Investor engagement and timely communication can be key differentiators for global managers like, for example, special online campaigns during IPO periods. Exclusive product partnerships are also growing as an important route to deepen relationships with key strategic partners,» adds Gan.
