Asia-Pacific spending on IT by the wealth management industry will top US$4.6 billion by 2015, a significant growth rate of 8 percent over a five year period, predicts Ovum in a new forecast.
Ovum finds that the ramping up of technology spend by the sector will be driven by a return to better days for the industry, as the number of wealthy consumers looking for opportunities to invest their money slowly increases.
In Asia-Pacific, China and India will be the major driver with a CAGR of 14% and 12.5% respectively compared to 8% in Australia and 7% in Korea.
Ovum senior analyst Jaroslaw Knapik notes that the recession had a big impact on the wealth management industry and it was one of the sectors that bore the brunt of the fall-out, resulting in growth in tech spend slowing considerably.
“With recovery now underway, the outlook for IT investment is much more positive," says Knapik. "Strong growth in the Asia-Pacific market, a need to invest in channels such as internet services, and compliance requirements of new regulations such as Basel III, are all fuelling Asian growth in technology investment.”
All channels will see an impressive growth; however this increase will be stronger in the Internet services. The high net worth banking and financial planning sectors of the Asia-Pacific wealth management industry will increase spending in this area by 8.6 percent from the beginning of 2011 to the end of 2015. Meanwhile in the retail brokerage sector growth will be 7.3 percent for the same period and in retail asset management, 8.6 percent.
“The need to create websites and applications that allow customers and financial advisors access to company websites via mobile devices such as smartphones and tablets will drive some of this growth in internet spend," comments Knapik.
According to Knapik, much of the rest will come from upgrading online services with personal financial management tools and closer integration of the online channel with middle and back office technology such as product origination, customer information or investment and portfolio management systems.
Ovum’s forecast shows that while there will be healthy growth in IT spend by the wealth management industry in Australia, China, India and Korea, that is slightly above the global figure of 6.5%.
“While the amount of money spent on IT will be greater in the developed world, emerging Asia-Pacific market is set for explosive growth in the next five years,” concludes Knapik.
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