SINGAPORE: A recent report by Fenergo featured in a Singapore Business Review article has revealed that a significant 74% of asset management firms in Singapore have lost investors due to delayed and inefficient onboarding processes.
The primary culprit behind this investor churn is the breakdown in Know Your Customer (KYC) procedures, which are critical for regulatory compliance but have proven cumbersome and slow.
The challenges faced by asset managers in Singapore are part of a broader global trend. With growing regulatory requirements and the need for meticulous investor checks, many firms are struggling to balance compliance with client satisfaction.
The Fenergo report emphasizes that outdated systems and manual processes often delay onboarding, frustrating investors and causing them to seek alternatives.
High costs of KYC compliance and evolving regulations
One of the key factors contributing to inefficiency in Singapore’s asset management sector is the rising cost of KYC compliance.
According to Fenergo, conducting KYC reviews in Singapore costs firms an average of $2,159 per investor. This considerable expense is eating into the compliance budgets of asset managers, creating further financial strain.
Moreover, 82% of Singaporean asset managers say their systems are unable to adapt swiftly to shifting regulatory demands, leaving them vulnerable to inefficiencies and potential regulatory fines.
The failure to keep up with changing regulations adds another layer of complexity to an already challenging environment, making it harder for firms to maintain investor confidence and avoid costly missteps.
Tech investments as a solution to rising risks
In response to these mounting challenges, asset managers in Singapore are making strategic investments in technology.
Fenergo’s survey indicates that asset managers are focusing on technology solutions to address a variety of risks, with operational risk (36%) and information and cyber risk (35%) topping the list.
Conduct risk (34%), reputational risk (31%), and financial crime risk (27%) are also key areas of concern, prompting firms to prioritize tech investments to streamline compliance processes and mitigate risks.
This push towards technology adoption reflects a growing recognition of the need for modernized systems to stay competitive in an increasingly regulated environment.
By improving KYC processes and enhancing flexibility, asset managers hope to regain investor trust and protect their bottom line.
The findings are based on a survey conducted by Fenergo in September, which polled 450 executives and client services teams from top-tier asset management firms in Singapore, the UK, and the US. These firms manage over $51 billion in assets under management (AUM) and face similar regulatory hurdles worldwide.
As Singapore’s asset managers look to navigate these complex challenges, the emphasis on tech-driven solutions and more efficient compliance procedures may be the key to retaining investors and ensuring long-term growth in a competitive market.