By the end of the second quarter of 2017, regulated, open-end fund assets worldwide grew by 4.7 per cent to $44.78 trillion from the first quarter, excluding funds of funds. Net cash inflow to all funds globally also reached $609 billion in the same period, compared with $615 billion of net inflows in the first quarter .

If we look at the Gulf Cooperation Council (GCC) more specifically, its growth story is particularly exciting, with key market events such as Kuwait’s inclusion in the FTSE Russell Index, Saudi Arabia’s anticipated approval for inclusion in both the FTSE Russell Index and MSCI EM Index, and the IPO of Saudi Aramco all likely to contribute to more growth of assets across the region.

Yet amidst these historic market events, is it possible that we may not have a clear picture of what the future asset management sector will look like? How can we predict the future when the market continues to shift, and with even more milestone events expected to take place soon? Having worked in the financial services industry for almost 20 years, I am optimistic about the GCC asset management sector’s growth prospects, despite how difficult it might be to develop a clear, certain picture of the sector in the next decade or two. And there is one growth catalyst that I believe, if leveraged effectively, could set the GCC asset management industry on a path towards rapid and sustainable growth.

That catalyst is technology.

Technology and how effectively we leverage it will determine how quickly and sustainably the GCC asset management landscape grows. We have seen markets such as New York, London, Hong Kong and Luxembourg actively embrace technological innovation to support the more efficient trading and distribution of cross-border funds. They have all shown exceptional readiness for innovation in past years, launching FinTech hubs or ‘innovation labs’ to support the growth and development of technology start-ups in the financial space. We are already on the right track as well in the GCC, with the Dubai Financial Services Authority and the Securities and Futures Commission in Hong Kong entering into an agreement recently to cooperate and share information surrounding FinTech innovation in their respective markets.

The Dubai International Financial Centre also launched its FinTech Hive this year and is calling on tech start-ups and entrepreneurs to submit applications for its program that will provide them with the appropriate training to become sustainable businesses. But I believe this is just the beginning — we need to continue to see more of a collective push across the region from governments, regulators, fund houses and legal bodies alike to make a real impact on the GCC asset management industry.

In this context, and given the current, rapidly changing market dynamics we continue to monitor, there are three key reasons why I think asset management firms should make technology a top priority as we look towards 2018.

First, the region is evolving and we have a new group of investors entering the marketplace — millennials. These investors will radically change the advisor’s role in the coming years. While longstanding client relationships with older generations in the region may prefer to maintain personal, face-to-face interactions with their fund manager or adviser, the up and coming youth will likely increasingly look to robotics to manage and grow their wealth. Passive fund management is also increasing in popularity, particularly amongst this investor group, as returns are based on what the index gives them — all for a marginal annual management fee. It is likely that we will continue to see younger generations move towards investment options that are robotic or self-controlled, and it will be important that asset management firms keep pace with this trend and technology itself. The term ‘robo-advisory’ could become a very likely reality indeed. Millennials consequently will be a significant investor base for fund houses to tap so it is important that they are able to offer the right digital platforms and services that best cater to their needs.

Second, there are logistical, operational and financial benefits to going digital for fund houses. Leveraging technology will further drive customer engagement, data mining, operational efficiency and reporting. Regular technological investments, rather than one-time deals, will be needed to cope with the ongoing changes in regulation and reporting. A report by PwC even states that asset management firms should consider the concept of integrating full-time, chief digital officers into their operations to better support the business. By fusing more technological resources with day to day operations this will no doubt help ensure more sustainable growth of asset management firms in the digital space over the years.

Third, and most importantly in my opinion, we have a responsibility to help facilitate Dubai’s agenda to become smarter than ever. As one of the only global asset management firm with local asset management capabilities in the city for the past two decades, we have seen how it has grown and developed over the years with the support of technology. The Dubai government for example has paved the way for Dubai to become entirely smart, and has made significant developments to date, making online payments for government initiatives entirely seamless and with a number of other initiatives underway.

The DIFC’s FinTech Hive is a perfect example of an initiative that dovetails the government’s agenda. But in the local asset management industry specifically, we can do more to support the nation’s technological innovation efforts. In the past year for example, we invested in a FinTech startup with digital advisory services to complement our existing product offerings, and will continue to monitor the market for possible collaboration with other unique, technology driven firms in 2018 and beyond.

As we look towards the New Year, let’s not lose sight of the future and what the GCC asset management industry could potentially look like in coming years. GCC asset management firms must to take the reins and use innovative technologies to drive the sector forward, and if we can do so successfully I have no doubt that our growth will not only be bright, but sustainable. The benefits speak for themselves, and if we don’t make an effort to embrace technology now, we may find some fund houses being left behind. And who knows, if regulatory authorities, governments and asset managers can work together in unison to promote innovation in the financial space locally, perhaps Dubai will be thought of the blueprint for other markets to follow when it comes to FinTech, if it isn’t on its way to being that already.

Dhiraj Rai is director of the Gulf and Eastern Mediterranean region for Franklin Templeton Investments.