With this in mind, during the first quarter of 2024, PwC Malta launched a survey to understand the current state of play in the local AWM industry, particularly how service providers in this sector are tackling the challenges referred to above and where they are seeing key opportunities.
Amongst the greatest challenges industry players are facing, increasing compliance costs is by far the greatest perceived threat to the industry. Furthermore, current economic uncertainty in terms of inflation, market volatility and interest rate movements are also adding to the uncertain outlook.
What are the greatest challenges faced in the industry today?
90% of respondents point at compliance costs as the greatest industry challenge.
In facing these challenges, over half of the survey respondents indicated that they are implementing cost control measures and looking at more diversified portfolio positions.
How do you plan to overcome these ongoing challenges in the coming months/years?
Furthermore, based on the data gathered, around 50% of the participants intend to or would consider the notion of forming a strategic consolidation with other AWM businesses to manage costs whilst simultaneously driving and increasing scalability for their business.
Around 50% of the participants intend to, or would consider the notion of forming a strategic consolidation with other AWM businesses.
Would you consider a strategic consolidation with another AWM business in the coming months?
Do you expect to keep operating out of Malta over the next twelve months?
Notwithstanding the perceived challenges, survey respondents have very little to no intention of venturing their operation outside of Malta. In this regard, 90% of the respondents plan to keep operating in Malta in the coming years showing that Malta retains a level of attractiveness as an AWM domicile. Survey results illustrate that Malta’s key strengths in attracting AWM businesses are mainly a reliable ecosystem of service providers, the approachability of the regulator, and cost-effectiveness when compared to other EU jurisdictions.
What do you believe is Malta's key strength(s) in attracting AWM businesses?
Do you expect to be launching any new products/funds/sub-funds over the next twelve months?
The evolution in the AWM industry, although facing several challenges, is showing no signs of slowing down. In this regard, results show that approximately 55% of the respondents intend to launch new products or funds over the next twelve months.
Do you expect to be promoting green products over the coming year?
Approximately 30% of the respondents also expect to promote green products in the near future, while 5% of the respondents are already promoting green products.
Do you utilise emerging technologies such as AI in your day-to-day operations?
Evidently, players are still willing to invest, including through the adoption of Artificial Intelligence (AI) tools within their day-to-day operations. Although only 10% of the respondents are currently making use of such technologies, around 40% of the remaining respondents intend to invest in AI-related tools and make the related changes within their operations including as regards work-flow automation, automated compliance and predictive analysis tools.
Around 50% of respondents already use AI tools, or intend to use them in the near future.
Which of the below AI Tools are you making use of or planning to invest in to enhance the services provided?
Survey results show that notwithstanding a challenging industry environment, Maltese AWM players feel that Malta retains its attractiveness as an AWM jurisdiction. Navigating uncertainty and the ever-increasing cost of compliance, with the help of the right technology remains key to surviving and thriving.
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