A collection of bitcoin tokens. According to Market and Markets, the blockchain technology market size will be worth $2.3bn by 2021. Photo: Bloomberg
Cape Town - The future of the asset management industry in the next five years would be significantly shaped by three disruptive technologies: blockchain, cognitive technology and robotic process automation (RPA), with the industry being at most risk from these technologies. This is according to a study conducted by professional services company, Deloitte.

The Future of Asset Servicing report said the industry had failed to keep pace with technological developments and that processes tied to legacy technology would be the first in firing line of the new technological wave.

“We believe that these disruptive technologies offer enormous potential for asset managers in creating efficiencies, reducing risk and improving quality of service to clients. It has been suggested that automation alone could reduce headcount is the asset servicing industry by 60 to 70percent while also achieving a cost saving of approximately 30 to 40 percent,” the report said.

Blockchain, the transaction database technology underpinning the bitcoin currency caused a stir when it was introduced in 2009, leading to the invention of a number of other crypto currencies.

The World Economic Forum (WEF) has forecast that by 2025, 10 percent of global gross domestic product (GDP) will be stored on blockchain platforms. Currently, WEF estimates that the total worth of Bitcoin in the blockchain is around $20 billion (R264.18 billon), or about 0.0025 percent of the global GDP of about $80 trillion.

Two African countries, Senegal and Tunisia have in recent years launched national digital currencies based on blockchain.

Larry Kehoe, the head of Deloitte’s Europe, the Middle East and Africa Blockchain Development centre said when applied to asset management, blockchain would result in a completely redesigned value chain that would streamline processes.

“If funds are selling directly to investors and this is recorded on the blockchain, it may also remove the need for a transfer agent to monitor subscriptions and keep a register of participants in the fund, further streamlining the whole process,” Kehoe said.

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According to Market and Markets, the blockchain technology market size will be worth $2.3 billion by 2021 at a compound annual growth rate of 61.5 percent.

The Deloitte report also found that asset management firms were increasingly using intelligent automation to review and analyse portfolio data, determine meaningful metrics and generate natural-language reports for their customers on the performance of their funds.

The automation of the workplace has been identified by WEF as one of the key disruptors to the labour market.

WEF’s Human Capital Index has found that 41 percent of all work activities in South Africa are susceptible to automation and 39 percent of core skills required across occupations would be wholly different by 2020.

Earlier this year, Cape Town-headquartered Sygnia Asset Management launched a "RoboAdvisor", a machine-learning system that offers consumers personalised investment advice without the commissions usually charged by a human financial adviser. Sygnia’s RoboAdvisor is the digital back end of a website that enables clients to input personal information, and that uses algorithms and financial modelling to create individualised investment or retirement plans.

BUSINESS REPORT