Asset managers fear disruption as digital technology comes of age

Asset managers fear disruption as digital technology comes of age

Typically sluggish adopters of new technology, asset managers are slowly waking up to the threats posed by the emergence of faster and cheaper digital rivals, with fully 80% of industry participants expecting significant disruption in the industry over the next ten years.

A survey of more than 450 senior executives in asset and wealth management on digital transformation commissioned by Dassault Systèmes from Create-Research found an industry struggling to come to terms with growing cost pressures and the arrival of digitally-led investment platforms catering to a new generation of technologically-savvy investors.

Just 27% of wealth managers polled offer robo-advisers, and only 31% use big data, while the adoption of revolutionary platforms like distributed ledgers is viewed as a distant dream.

The results are underpinned by a new report from Ernst & Young which finds that many wealth and asset management practitioners are "not very familiar with how blockchain actually works or what the benefits might be".

The practical implementation of distributed ledger technology is likely to remain on the far horizon as the industry grapples with the more pressing issue of grafting modern digital tools onto a patchwork of legacy systems.

With Internet giants like Google and Facebook showing an interest in money management, the majority of industry participants surveyed by Create-Research envisage a competitive landscape of alliances with external disruptors or the development of proprietary platforms; only a minority expects external disruptors to carve out niches.

“The key driver of digitisation in the years to come will be changing client behaviors, under which financial services will evolve from being supply-led to demand-led,” says Amin Rajan, CEO, Create-Research. “This means that wealth management is at the dawn of a new transformation, more far reaching than anything experienced before. The future belongs to those with a clear vision for their business in the digital age.”

Comments: (1)

A Finextra member
A Finextra member 13 June, 2017, 04:56Be the first to give this comment the thumbs up 0 likes

These "technologically-savvy investors" are really looking for a good customer experience and easy access to information that matters to them. For example, interactions throughout the account opening phase are crucial in gaining new clients and keeping them but some companies persist in using PDF's and emails. 

With reference to "grafting modern digital tools onto a patchwork of legacy systems", there really is little other choice for the large majority of companies. Although a lot of companies may appear to have a fantastic digital front-end or interface, the reality is there is still quite a lot of manual and clunky systems on the backend. 

Clients are now spoilt for choice and the reason why Google and Facebook might be able to wrestle their way into the industry is because they are experts in knowing how customers behave and how to build slick interfaces that keep people coming back.

Easy to open an account, easy access to the information you need?

That's Google and Facebook in a nutshell.