A shift in growth patterns will take place for both traditional and alternative investments. Traditional active investments will continue to be the main asset of the financial industry but is expected to shrink from 79% in 2012 to 65% in 2020. In comparison, alternatives will make a cross roads, expected to rapidly grow from 13% of total assets managed with an upward prediction.
Significant events such as the GFC had a major influence in the way financial businesses operated post-crisis. The reduction of their risk-taking, profitability and scope of their operations had taken place due to new post-crisis regulation which has dramatically increased the compliance burden on financial businesses and the cost of regulatory penalties.
Focussing on Reg-tech, two painful pressure points have risen in the financial industry which support its growth. On the expensive side, fines have risen for breaches and failing to comply with regulatory laws and the increasing costs of regulation and compliance has become one of the top concerns for Investment Managers industry wide.