One of the recurring issues we have been working on with our asset manager clients is technology – make that rapidly changing technology. Be it blockchain, artificial intelligence, robotic process automation, analytics, workflow software, cloud computing, robo-advice, big data or advancements in cyber security offerings, the list goes on.
What’s the takeaway? We currently find ourselves in an era of unprecedented displacement and disruption.
Although each firm’s situation differs and the opportunity set available to them varies too, one thing is certain: the landscape is changing. What does this mean? Long-term success will depend on the ability to embrace new technologies in creative ways and deploy them across organizations to unlock value.
To do so, the industry needs to redefine itself. Simply put, to succeed in the future, asset managers should become more innovative. Digitalization and leveraging emerging toolsets will play a critical role in this effort. They help firms to derive insights, drive infrastructure and technological efficiencies as well as enhance the end client experience.
The linchpin is an asset manager’s commitment to think differently—to build, develop and maintain an innovative culture.
Hail the Revolution
Creating an innovative culture often starts at the top of the organization. Genuine enthusiasm and commitment from the top-level champions revolutionary thinking. Most importantly, leaders should empower employees to drive transformation through the firm.
Some asset managers are further along this journey than others. Over the past year, a number of high profile “Silicon Valley” innovators moved to Wall Street. The objectives of these strategic hires were mostly to inject creativity, challenge the art of the possible and rotate to the new with the help of technology.
Acquiring top talent is the first step to pivot to a more innovative culture. But firms cannot expect outside experts alone to foster the innovation agenda.
The second step is to confirm the entire organization, from senior leadership to interns, is onboard. All employees need to understand that new ideas about processes and problems are encouraged and rewarded. Warby Parker, crowned number one on Fast Company’s 2015 Most Innovative Company’s list, believes employees must take it upon themselves to be innovative.1 To that end, the company asks everyone each week for an innovative idea.2 Channeling the power of a firm’s most valuable asset—its employees—is an effective way to transform into a more innovative culture.
Finally, the asset management industry might want to follow in the footsteps of the leading banks and create dedicated innovation labs. Innovations labs should be tasked with idea generation and staffed with diverse employees who offer wide perspectives.
To enable this capability, a strong governance structure should be in place to help ensure that most ground-breaking ideas are pursued. The selection committee should consist of leaders steeped in making timely, accurate and creative decisions. Far too often, strategic initiatives take months—even years—to get the green light. In this new land, the old playbook must go. The world is changing: employees are changing, market participants are changing and clients are changing too.
The stakes in the industry have never been higher. The benefits of innovation cannot be underestimated. Being the first to market with an innovative solution developed from insights gathered from an asset manager’s own client data sets would create strong first-in advantage. Leveraging and implementing technologies, such as robotics and the distributed ledger, could help radically help reduce costs, better access data, increase transparency, drive efficiencies, reduce risk—and could set firms apart. The time to act? Now!