China Asset Management at an Inflection Point
While the industry is about to undergo a major transformation, this process will also affect society more broadly: Individuals will be able to invest their money in a more sophisticated a...
2020 will be a pivotal year for the Chinese financial system: China is removing shareholding limits on foreign ownership of securities, insurance and fund management firms one year earlier than planned and also scrapping entry barriers and ownership caps for foreign insurance companies and insurance asset management firms. These changes will provide both global as well as domestic players with significant opportunities and reshape the makeup of the Chinese financial services landscape. At the same time, due to the amazing rise of technology-powered business models system stakeholders will readjust their positioning vis-à-vis each other in a quest for lasting relevance.
Under its initiative the Future of Financial Services in China and Beyond the Forum is convening both its community of Chinese stakeholders as well as leading global financial institutions to explore how the ongoing transformation must be shaped in order for a resilient, effective and open system to emerge -- a system that serves both individual stakeholders as well as future economic growth. Ultimately, the initiative seeks to contribute to the closer integration of the Chinese markets into the global financial system. It does so by building trust between Chinese and Western stakeholders through engagement in two main work streams.
The opening up of the Chinese financial system accelerates the development of the domestic asset management industry which to date remains immature. A combination of enormous savings in the form of bank deposits being 'unlocked' and ongoing pension reform will provide the industry with sizable onshore opportunities. At the same time, significant challenges remain for both local and foreign players alike to realize the full potential of these opportunities. Some of these challenges include retail investors' lack of trust in traditional financial advisers, local industry players' lack of know-how in portfolio and risk management, a currently limited product shelf and under-developed local ecosystem to support product and services offered overseas. The Forum provides a platform for domestic and global industry stakeholders to come together and explore how they might overcome these challenges and jointly build an industry that supports the transition from savings to investments primarily in the pursuit of safe retirements and also effectively allocates that capital to serve the ongoing funding needs to the Chinese real economy.
While all major financial systems globally have experienced substantial, technology-enabled transformation over the past decade, no system has evolved as rapidly and dramatically as the Chinese one. As the relationship between the large state-owned banks, big techs, independent fintechs, mid-size and regional banks and digital banks continues to change, the ongoing evolution raises important questions about the future role and relevance of each stakeholder group. And while the large technology firms have made significant advances in defining the future nature of financial services it is becoming clear that policy makers will increasingly set boundaries to ensure the survival of the traditional banking system. As a result, incumbents and challengers will enter partnerships will enter partnerships that leverage their respective strengths and at the same time redefine their role in the system. The Forum is committed to facilitate this transformation and is convening all relevant stakeholders to identify the most inclusive and innovative partnership models through a dialogue series and insight publications.