Of all the changes asset managers face today, perhaps none has more potential to transform the industry than the rise of digital technology. Digital transformation can provide a significant competitive advantage to asset managers, few, however, have successfully achieved this transformation—and this is a big problem.
Digital technologies change things up in capital markets
Social media, mobility, analytics, big data and cloud have reached a level of maturity where, in combination, they are disrupting the capital markets ecosystem and putting traditional revenue and profit at risk. These digital technologies are at the core of a changing asset management landscape seen in:
- Demographic shifts in portfolio managers and clients. Financial advisors, portfolio managers and clients are more tech-savvy and often conduct business primarily through digital channels.
- Rise of low-cost providers. Firms offering do-it-yourself and/or extremely low-cost asset management models are putting pressure on more traditional firms to demonstrate the value they provide.
- Growth of emerging markets. Investors in emerging markets are often more reliant upon mobile technologies. Asset management firms seeking to court these investors need to respond with innovative mobile applications.
- New regulatory environment. Regulatory agencies’ adoption and implementation of digital technology has failed to keep pace with asset managers. Firms will need to work collaboratively with regulatory agencies, helping to define the review process and addressing technology gaps.
- New concerns about risk. Firms face a volatile environment and conflicting pressures to lower risk while delivering acceptable returns in a low-interest rate environment.
- Reputation and brand awareness. Asset managers must manage their reputations and increase brand awareness to clients and advisors who are increasingly influenced by social media and the digital grapevine.
Indeed, the asset management landscape continues to change and evolve—but so must asset managers. Want to remain competitive? Retain clients and advisors? Increase market share? A business-as-usual approach won’t do. As change will be constant, agility will be the name of the game going forward, and digital transformation may be just the winning strategy firms have been searching for. Join me next week when I look at how firms can undertake such a transformation. To learn more, read: