#Japan #Fintech #Tokyo #Alternative Investment #CAT Partners

Digital Transformation in the Alternative Investment Sector

In recent research conducted by CAT Partners Co., Ltd., based in Chiyoda, Tokyo, it was revealed that a significant majority of alternative investment management firms are leaning towards digital transformation. This study targeted both domestic and international investment and sales companies to assess the adoption of digital technologies within the alternative investment landscape. The results indicate that over half of these firms are considering digitalization initiatives in the next three years. Specifically, 21% of the respondents plan to implement such measures within just one year.

Key Insights from the Research

The survey unveiled several crucial findings about the current state of alternative investment firms:

• - Focus on Efficiency and Growth: Many firms prioritize operational efficiency and cost-cutting alongside expanding sales channels and enhancing investor relations. An impressive 63% of respondents believe that digitalization will contribute positively to their profits.
• - Demand for Advanced Features: Notably, the respondents expressed a heightened interest in various features that digital platforms could offer: 77% are keen on investor management functionalities, while 63% highlighted the importance of comprehensive reporting capabilities. Moreover, 61% are interested in the ability to electronically sign contracts.
• - Potential of New Technologies: Emerging technologies such as generative AI are viewed as valuable tools for addressing specific challenges faced by these companies. There’s a strong desire for automated solutions that can help in creating investor Q&A responses (70%), assisting in filling out due diligence questionnaires (68%), and generating meeting minutes with investors (61%).

Challenges in Digital Adoption

Despite the clear advantages of moving toward digitalization, the survey also identified several obstacles. Many firms reported that existing resources cannot cope with the projected growth (77%), and a significant number face difficulties accessing their desired market channels (42%). These challenges underscore a pressing need for the adoption of fintech platforms, which could provide the required infrastructure to streamline operations and reduce costs.

The Global Perspective

Globally, the democratization of alternative investments is already underway, with fintech platforms serving as critical enablers. These platforms facilitate efficient connections between asset managers and sales firms, effectively addressing burdens associated with operational demands and knowledge asymmetries. However, Japan's alternative investment market lags in this digital advancement, highlighting an urgent need for improvement.

Shoko Shiga, CEO of CAT Partners, emphasized that leveraging external fintech platforms can help overcome these hurdles, presenting a timely opportunity for the Japanese alternative investment sector to accelerate its digital transformation. She noted, "The evolution from first-generation to second-generation platforms, incorporating technologies like generative AI, will enable enhanced service delivery. We aim to lead this change in the Japanese market by providing tailored solutions that meet the unique challenges of our industry."

Retail Firm Perspectives

In the retail sector, 54% of firms expressed optimism about expanding their reach through alternative investments. However, they too face several issues, such as a lack of knowledge among sales staff (77%) and difficulties in explaining complex concepts to customers. Additionally, compliance with regulations remains a notable challenge for 53% of respondents.

The expectations of retail firms from external fintech platforms primarily revolve around digitizing contracts and reporting (77%), direct communications with investment companies (53%), and the provision of portfolio-building tools (47%).

A Common Understanding

Overall, both segments—investment management and retail—recognize that operational burdens, educational deficits, and compliance challenges are prevalent. They agree that digitalization is not just a method for enhancing efficiency but a strategic foundation for revenue growth. Embracing external platforms will be crucial to unlocking new investor segments and solving existing issues within the industry.

Survey Methodology

The survey involved 60 companies within the investment management and retail sectors, including banks, trusts, investment advisories, and securities firms, and was conducted online between July 11 and August 3, 2025. The responses were collected anonymously, allowing an unbiased analysis of each company's willingness to pursue digital initiatives and their current challenges.

Conclusion

The findings of this research highlight a pivotal moment for alternative investment firms as they navigate the digital landscape. By overcoming existing barriers and embracing innovative fintech solutions, these firms can significantly enhance their operational capabilities and expand their investor outreach, paving the way for the future of alternative investments in Japan.