Markets can expect major international asset managers to build distribution channels via the purchase of established robo-advice fintechs, said data and analytics company GlobalData in a statement.
Global Data pointed to recent moves by Nomura Asset Management, which agreed to buy a majority stake in Tokyo-based robo-advisory services provider 8 Securities Inc and a minority stake in Hong Kong-headquartered parent company 8 Limited for JPY2.7bn ($25m).
Compared to most robo-advisers, 8 Securities has been in the market for a while. Chloe, its robo-advice platform, was the first in Asia to be offered via a mobile app and it currently has a presence in Hong Kong and Japan.
The investment reflects the promising growth and potential of robo-advisory services in Asia including Japan, and marks one of Asia’s largest fintech capital injections in 2018.
Andrew Haslip, Head of Financial Services Content for Asia Pacific at GlobalData, said in a statement: “Other large-scale asset managers will need to make similar investments in proven robo-advisors if they want to compete for the next generation of investors.”
A partnership with a major international brand such as Nomura will allow 8 Securities Group to expand into new geographies and gain enough business volume, a difficult task for all start-up robo-advisors.
Nomura Asset Management operates in 14 markets and had assets under management of $473bn at the end of 2017, a fraction of which would be enough to generate the scale necessary for 8 Securities’ Chloe to become economical.
For Nomura, volume and economies of scale are obviously not an issue, but remaining competitive among younger consumers is.
As per the company’s 2017 Mass Affluent Investors Survey, although only 1% of investors use robo-advisors as their main investment channel, in total roughly 27% of millennial investors have used one.