In our recent viewpoint COVID-19: A capital markets industry perspective, we examined what capital markets firms should be doing now and next to deal with the unprecedented challenges being faced during the pandemic. In this blog post, we’ll apply and refine our thinking specifically for asset managers and their clients.
In many ways, the COVID-19 crisis has applied a stress test to every aspect of a firm’s operating model. Asset management firms – indeed, most companies – have made tremendous changes in how they operate in a very short period of time. We have all had to run our businesses and stretch our technology capabilities in very creative ways, especially as the need for social distancing has transitioned most of us into a virtual workforce.
“Now” will be with us for a while
We can assume that re-establishing some form of “normality” will likely take several months, and the consequences of the pandemic will persist long after it has receded. There’s no doubt the asset management industry is facing a time of significant and lasting change. Leaders must prepare for the short-term while also developing new capabilities and ways of working that seamlessly enable longer-term changes to how they operate.
The key word summarizing today’s actions is operational resilience, which is defined for our purposes as the ability to withstand a shock or disruption and continue, to the extent possible, normal business functions. Today, operational resilience depends on a number of capabilities: elastic collaboration, virtual workspaces, networking, business and technology continuity and security, all of which must be achieved at scale.
A renewed focus on connectivity and security
Most asset managers have transformed their workforces to be either fully remote or down to just a skeleton staff on site. This new modality places unprecedented burdens on both applications and networking bandwidth as data-hungry applications now run over public networks.
Scale, speed and reliability of connections assume greater importance in the management of now-mission-critical functions such as collaboration and conferencing tools; and all these factors are important inputs as firms continue to examine both their near-term and long view on their cost to operate, service capabilities, quality metrics and risk profiles.
Communicating from home over public networks also requires a renewed focus on security. Some simple, common sense measures firms can take include ensuring that communications are encrypted, employees use approved conferencing technologies, laptop software is kept up to date with the latest antivirus and other security software, and firms institute additional security measures such as two-factor authentication where possible.
Modernized infrastructure and a new culture
Fast and scalable networking, distributed security, video and messaging tools, virtual workspaces: these key infrastructural capabilities enable companies to continue to execute while also preserving aspects of culture and connective tissue. And these in turn depend upon a rock-solid, resilient computing foundation, which is why we see asset managers increasingly – and more quickly – relying upon the cloud.
Related to culture, effective leaders are now utilizing virtual events, turning on their cameras to personalize interactions, developing new work from home traditions, resetting expectations, and most importantly, they are not shying away from what we are all going through. Authentic and candid messaging from leadership is resonating with employees.
Moving past the now to the next
We’ve learned – and are continuing to learn – many lessons. As we move past the current crisis and into a period of recovery, we can anticipate that many asset managers will institutionalize some of the changes put in place during the pandemic.
Even as I write this, most firms are building their back-to-work plans – and are recognizing, for example, that not all business units are created equally. While it’s important that some return to the office quickly, others can continue to work remotely, maybe even permanently. Familiar “elbow-to-elbow” trading desks and packed cubicle floors will certainly need to be modified.
New possibilities emerge for growth
With all non-strategic capital spending getting scrutinized, companies are hyper focused on actions that deliver immediate value, business agility and enhanced speed to market. Some firms, for example, are applying their continuous improvement and business process engineering teams to document and measure the new and ad hoc operational processes implemented during this time of crisis to identify opportunities for re-engineering later.
But in other areas of the business, wholly new efficiencies have been uncovered. With more of the workforce at home, investments in facilities and offices can potentially be reduced. Firms are also investigating new work models, such as staggered hours and “red/blue” teams alternating in the office. Others are considering how to redesign existing office space to increase the distance between people.
And as business travel has been all but eliminated during the present crisis – with less of an impact to the business than might have been expected – T&E budgets will be under scrutiny.
We do not expect that businesses will return to their pre-pandemic modes of operation. Rather, we believe that firms will reprioritize existing initiatives and accelerate others:
- Asset management firms will accelerate their adoption of the “operating model of the future,” implementing both new technologies and platforms as well as new operational processes. Further investments in security, remote management, networking, virtual desktop interfaces and other technologies will continue this profound transformation.
- As mentioned, firms will also accelerate their use of cloud computing to build upon the benefits of resilience, scale, reach and security realized during the crisis. We also expect that, owing to the low risk, pay-as-you-go model of cloud computing, firms will embrace the cost of ownership and the flexibility to drive new product and service innovation.
- As part of the drive to simplify operations, organizations will accelerate initiatives to manage data at scale, including standardized definitions, enhanced governance and control and more flexible self-service reporting options.
- Companies will expand their use of automation and artificial intelligence, letting algorithms handle tasks that were previously manual, such as using technologies like robotic process automation. Other labor-saving technologies like conversational bots and robo-advisors will further flatten the cost curve.
We believe leading financial firms will focus new operating models on differentiation, durability and cost-effectiveness at their core. Overarching these objectives will be a desire to “future-proof” their human and technology investments to be ready both for disruption as well as for the evolution of financial markets. If nothing else, the pandemic has re-emphasized the key aspects of our businesses: the people, processes and technologies that are important, and where and how they can be improved.
How can Accenture help?
To help our clients navigate both the human and business impact of COVID-19, we’ve created a hub of all our latest thinking on a variety of topics. Each perspective highlights specific actions which can be taken now, and what to consider next as industries move towards a new normal. From leadership essentials to ensuring productivity for your employees and customer service groups to building supply chain resilience and much more, our collection will be constantly updated. Visit our hub and check back regularly for more insights.
Contact me at firstname.lastname@example.org if you would like to talk about what’s on your top 10 list for 2020. For a downloadable version of the trends, visit: Asset Management in 2020: 10 Key trends to watch.