When it comes to asset management, pressure from a number of sources has intensified the need for digital transformation. I shared some of those challenges with you last week. Now, let’s take a look at how firms can respond.
The case for digital transformation
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Digital transformation can provide a significant competitive advantage to asset managers in the form of:
- Better performance of assets under management.
- More effective and efficient distribution strategies.
- Improved segmentation and targeting of key investor groups.
- Faster development of more desirable products.
Sound appealing? The promise of digital technologies is indeed attractive, and while social media, mobile, big data and the like play a key role in enabling the digital transformation of asset management, one feature plays an even bigger role—a shift in firms’ orientation, from selling a product to selling to a client. Successfully accomplishing this move to client-centricity requires firms to understand what clients and advisors really want and need from asset managers, then be able to deliver.
Digital transformation: Where to start
Asset managers should start by taking a step back and look to develop outcome-based digital strategies using an “outside-in” approach—one that uses digital technology to create operational efficiency and deliver customized experiences. Integration of digital technology across the investment management lifecycle will allow asset managers to quickly address challenges as they arise and adapt to change more rapidly, especially when it comes to:
- Developing products. The use of big data to monitor social media and track investor sentiment can support the development of new products that reflect changing investor demands.
- Generating demand and selling to clients.As the cycle moves into the phases related to generating demand and selling to clients, the use of digital technology will depend upon the firm’s chosen strategy. For example, a model based on self-service and low-cost options emphasizes the need for mobility, interactive solutions and analytics.
- Growing the relationship.Social media and big data analytics can uncover market sentiment that may affect investment decisions. More robust predictive analytics supporting “what-if” analysis can forecast impact to fund performance by new combinations of strategies or fund managers.
- Serving the client.To optimize the potential of digital technologies, asset management firms should concentrate on end-to-end solutions that streamline and automate as many processes as possible.
- Reputation and brand. Asset managers can start building a stronger brand presence by establishing a consistent message and voice. Setting digital priorities. Using analytics to identify channels with the greatest potential impact. Listening and responding to the clients and advisors on their terms is vital to establishing a strong brand and a reputation of trust.
Taking the right action rather than just taking action will be key for successful digital transformation. Having the IT and digital foundation in place to support agility, increase speed-to-market and improve overall performance will be critical. After all, attracting clients and advisors through innovative marketing and distribution—and then disappointing them through poor execution—is not a recipe for success. To learn more, read: