How Financial Managers Can Navigate the Digital Ecosystem

Combine the low interest environment with the current digital tsunami, shifting demographics, the move from active to passive and new well-funded players in fintech, and it is clear the asset management industry is witnessing unprecedented levels of change. That’s not to mention rising competition from new players such as robo-advisory firms.

Personalization is key

That means personalization and customer engagement will be one key to ensure growth in the future. Indeed, Bob Reynolds, President and CEO of Putnam Investments, believes it’s not about active or passive investing but how to make investment goals personal to a client and personalize them for a customer, according to the Roubini Thoughtlab report on Wealth and Asset Management 2021.

Technology has the ability to shape the client experience for the industry as well. With more palatable advisory fees and other cost-effective services across commoditized asset classes, technology can increase the global reach of wealth management firms as wealth is redistributed across global and emerging markets.

Path to digital transformation

As 2017 approaches, the senior asset management leaders I speak with are examining their strategies and budgets to fund the path to digital transformation. A consistent point of emphasis in those conversations is that one size does not fit all for any digital strategy. However, there are some universal themes that should be looked at as you plan for 2017 and beyond:

1. Establish a governance framework for enterprise digital transformation—One key to success is the development of an enterprise strategic plan for digital transformation. Each business unit, department and division within your company might be engaged in everything from mobile to cloud to creating a customer experience. However, if there isn’t an overarching governance framework tying those digital strategies with your organization’s overall goals, you could have small short-term wins without meaningful long-term transformation.
2. Place the customer at the center of transformation—What you do for the customer is vital for digital success. Doing digital for the sake of it (“I can build a mobile app for this”) without putting the customer at the center of your strategy will lead to minimal return on value.
3. Develop an omni-channel approach—As an asset manager you should be able to seamlessly meet your customer needs whenever and wherever the customer desires across multiple channels. These channels are not all digital, but you need a consistent, integrated experience from mobile to websites and down through to your call centers in order to drive loyalty. That includes self-service, the ability to review portfolio holdings or instantly speak with an advisor. This is not only a generational requirement (“I will target the millennials”) but for customers across all demographics.
4. Support the SMAC (social, mobile, analytics and cloud) Stack—Asset managers, unlike some of the large retail and commercial banks, have less legacy technology and infrastructure. Moving from legacy, on-premise architecture to an architecture that is open (open APIs), modular and agile to leverage the SMAC stack can offer the flexibility you need to deliver sustainable engagement.
5. Identify your own unique path—“Technology is making customization easier and cheaper each day,” says Alexa von Tobel, Founder and CEO of LearnVest. The path to digital transformation is not the same for every institution. You have to look beyond the market noise and hype about what a competitor is doing to see what fits with your specific strategic goals and objectives.
6. Define a talent acquisition strategy—Asset managers have different strategies to target talent. For example, UBS has decided to build talent in house and create “digital garages.” Others are looking at third party partners and startups to find scarce talent, while some are tapping into academia to build a pipeline of the future.

Greater competition lies ahead

Digital is leveling the playing field for asset managers with lower barriers to entry that empower new, nimble competitors to take market share. At the same time, client demands are changing as they expect similar experiences when they interact with the rest of the digital world. For traditional firms, going digital is not without challenges, but doing nothing is not an option.

Welcome to 2017. Another year of constant change and disruption.

For more of my commentary, follow my posts on LinkedIn or check out my blog on Finextra.