A new report from PwC predicts major shakeups for the ETF industry due to technology over the next few years.
“Almost every familiar aspect of the ETF industry is likely to be made over by the unprecedented onslaught of automation in the future,” according to the report.
PwC surveyed executives from 60 global ETF and asset management firms in 2016 for the report. Participating firms account for more than 80% of global ETF assets.
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Over a third of respondents said advances in data analytics and machine learning will affect ETFs’ investment operations in the next five years as managers’ access to data increases and decision making gets more precise.
“Transformational developments in areas like artificial intelligence and machine learning can enable asset managers to build systems that outperform humans by mining complex financial data in a faster and more insightful manner,” PwC wrote in the report.
Brokerage services are another area ripe for disruption. The report found 29% of respondents believe ETF brokers’ business model will be dismantled as automated advice gets more sophisticated and more appealing to mass affluent investors.