Asia’s funds industry embraces digital tools in the new normal

Asian fund managers are increasingly making use of technology in their marketing and sales strategies, with managers surveyed by Cerulli ranking an increase in their digital and social media presence as their third-most-important priority.

At a regional level, Cerulli’s survey shows that 87 per cent of managers are interested in increasing their expenditure on digital marketing. On the other hand, more than half (52.6 per cent) of the respondents are inclined to reduce their expenditure on print advertisements, while at least one third is keen on reducing budgeted allocations to traditional channels such as TV, radio, and billboards.

The recent work-from-home arrangements point to the rise and potential of digital channels as tools for creating awareness, sharing market and fund information, and closing fund transactions. In China, online fund platform sales flourished in the first quarter of 2020 as investors were confined indoors due to the spread of Covid-19. In India, it was not difficult for managers to get in touch with distribution partners and investors during the recent lockdown as firms swiftly used emails, webcasts, and videos to offer insights on markets, educate investors, and promote products.

A theme that has emerged from Cerulli’s interviews is that funds that are simple, easy to market, and have lower risk-return profiles have found more success through online channels. However, to meet the sophisticated investment needs of high-net-worth individuals, managers should partner with traditional distributors for marketing purposes.

While digital platforms can entice investors and result in sales, it could also lead to churning among investors. As information availability increases, the tendency to switch between funds could also increase. It is worth remembering that Asian investors typically do not have long investment horizons.

As the need for digital touchpoints grows, it must be noted that digital marketing has to be well thought out, and content needs to be delivered innovatively to better engage with investors. Moreover, digital marketing can be a make-or-break strategy. While it can help in reaching out to a large number of investors and improve the perception of a firm, a poorly crafted marketing and advertising plan can work in the opposite way and damage the firm’s reputation.

“In the long run, Cerulli believes Covid-19 could be a catalyst for increasing the use of digital channels for marketing, advertising, and fund distribution,” says Leena Dagade, associate director with Cerulli. “As digital channels prove their effectiveness in reaching out and servicing clients, they are expected to play a bigger role in fund distribution. Stable digital platforms and clientele, as well as good customer service, are important success factors. As competition intensifies, managers and distributors will need to be innovative in meeting the requirements of their clients and engaging with them.”