It’s happening! The digital transformation of asset managers

Jul 12, 2019 2:10:11 PM

Silicon Valley firms like Google, Facebook, Amazon and Uber have set the bar when it comes to digital experiences. And the rest of the world is playing catch-up, causing earthquakes in traditional industries across the economy. Today, asset managers are responding by embracing new platforms that focus more and more on this user experience.

The need for a digital transformation is fundamental to the growth of online platforms as the next generation, millennials, ‘come of age’ and expect everything they do to be possible on smart devices, 24/7. Add to that the fact that talent is drawn towards emerging tech companies rather than Wall Street, and you’ve got a perfect disruptive storm waiting to happen.

This is where fintechs come in. Those who realise there is opportunity in ditching old traditional operating models, for new ones that openly embrace new technologies, are set to capitalise on the next generation’s investment power.

KPMG’s The Pulse of Fintech reported that 2018 saw a global investment of US$111.8 billion, with the years ahead predicted to see increasing investment in AI and automation, showing an appetite to move forward and putting asset and wealth managers at risk of being left behind.

What do clients want?

Clients are increasingly demanding seamless, visually fluid digital spaces centred around simple user experience. This means firms need to focus on the following three areas to remain competitive:

1 - Smart devices: users expect simple access to transactions anywhere they are, at any time. Just as Google and Uber are doing ahead of the field, asset and wealth managers need to apply this technological sophistication to their own client experience.

2 - Interactivity: immersive experiences is a powerful trend leaving many behind, but applying the time and effort into providing interactive access to advisers, to product experts and educational and research tools, will pay dividends.

3 - Dashboards, hubs and analytics: giving clients access to compelling online dashboards enhances interactivity and gives managers the opportunity to present real-time analytics and portfolio reporting in a visually appealing format.

The evolution of digital interaction also frees up adviser time, as running online chats and video conferences can be done from home, and utilising their own dashboards for quick access to client information, setting alerts and reminders, managing client portfolios and compliance checks all through a single platform.

What is the impact of this digital transformation?

A core driver of the emergence of digital-led firms, the mass availability of advice, and robo-advisor disruptors such as Nutmeg, has been significantly lower costs. Clients are becoming more self-directed, relying on their own research, market learnings and portfolio decisions before - or even instead of - asking an adviser.

This is a trend that asset and wealth managers worldwide need to roll with, for fear of being left behind by emerging newcomers.

To prepare for the future, professional services firm Ernst & Young recommends that asset and wealth managers begin a six stage evaluation of their business:

1 - Identify and understand client needs/expectations

2 - Build a shared client experience vision

3 - Conduct an organisational digital maturity assessment

4 - Evaluate competitive threats

5 - Identify enabling technologies

6 - Construct a road map

With digital transformation accelerating, innovation and brand positioning will become more important factors in dictating whether asset and wealth managers will sink or swim. This is a critical time to digitise, as waiting any longer will prove costly, especially as asset managers typically lag behind other sectors when it comes to digital disruption.

The question executives must ask, therefore, is not when or whether to invest in new capabilities, but how to do so effectively.

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