When we consider the state of the asset management industry, the title of a song by the recent Nobel Prize for Literature winner Bob Dylan comes to mind: “A Hard Rain’s Gonna Fall.” Think about it; There are market regulatory and client pressures. And increasing global complexity. And technology disruptions. Asset managers need to contend with and take these challenges head on. And they can.
There are, in fact, opportunities for proactive firms to capture market share and increase profitability. Yes, even in this market.
In our view, innovative and actionable solutions could be found in four key areas:
1. Asset Management Operations
Despite market difficulties, asset managers can expand their share and profitability. Their operations model, processes and product menu offer a number of opportunities to introduce innovations. They could enhance scale, efficiency and client-centric services by industrializing core operating models, regulatory and business processes as well as expanding digital capabilities. Solutions need to go beyond tactical cost cutting initiatives to transform the business.
How? One avenue is by leveraging robotics and other technological updates. Results yield a more efficient and cost effective operations stream, which is scalable to support organizational growth. Other key areas to consider include:
- Operating model design and development
- Business process redesign across the investment management lifecycle
- Regulatory, control and governance design and implementation
- Product development
- Merger and acquisition
2. Platform and Service Provider Integration
As asset managers face unprecedented growth, increased product complexity and regulatory burdens, their operational support teams and technology solutions are continually stretched. Make that overstressed. Platform and service integration could create optimal trading, recordkeeping and infrastructure, aligned to business objectives. Doing so helps firms develop a vision. It weighs the strategic value of new technology platforms versus outsourced solutions within the context of risk and speed-to-market for new products and services. And it focuses on core competencies versus building expertise in commoditized functions.
- Defining strategies through current requirements and future vision
- Conducting assessment and section methodology and execution
- Developing target operating model for platform or service provider selection
- Performing test and conversion strategy and execution
3. Enterprise Data Management
Access to high quality, relevant data across an organization is necessary for investment decisions, trade execution, securities pricing, risk management, regulatory compliance and portfolio valuation measurement. Obtaining this data, however, can be difficult, particularly in a dynamic environment burdened with regulatory changes. The key is to optimize data use throughout the enterprise. The question is: how?
One way is to develop an effective enterprise data management initiative, and think of data management as a means to integrate strategy, business and technology. It focuses on data management assessment, operating model design and visioning, data quality and platform identification and selection.
Other solutions may include:
- A data domain strategy and implementation, which focuses on regulatory and risk reporting, domain subject matter area governance, market data management and data quality implementation
- An enterprise data management technology, which includes data governance (meta data tools), data warehouse (big data hub), data integration (ingestion tools) and master data management and data quality tools
4. Digital User Experience
It’s a digital world and the “Digital Revolution,” which accelerated in the last 25 years, has changed the way the world interacts. In the asset management industry today, clients seek information in a more personalized, transparent and collaborative service. And they expect it delivered quickly, effectively and efficiently. To support their clients with the agility and control to meet these demands, asset managers need to transform the user experience across multiple touchpoints.
- Reimaging and implementing end-to-end digital client experiences from prospecting to onboarding to servicing
- Installing digital content creation and management systems across multiple channels
- Transforming sales, customer relationship management and distribution to be more seamless
- Optimizing client information delivery
- Enabling social media
- Designing service based on digital enablement of core functions to increase efficiency and scale
In all… these thoughtful and innovative solutions may not stop the “hard rain” from falling. But they surely could help asset managers weather the storm and even prosper.