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Be more client-focused to meet the challenge of “consumerisation”

Posted by on 07 June 2016
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Since the 2008 crisis, stringent financial regulations have been introduced to ensure customers are protected, driving transformation in Asset Management and Asset Servicing.

Robo advising, the new paradigm of managing money by using algorithms and providing low cost automated advice, started in 2012 at almost zero assets under management (AUM). By end of 2017, it’s expected to have $300B. And a recent report by A. T. Kearney says it will be $2.2 Trillion by 2020. Even at a 50 basis point fee, that is $11B that traditional asset managers won’t get.

When you look at the leading technology names like Facebook, Apple, Netflix, and Google (known as “FANG”), user experience is very positive. When was buying a mutual fund? If Amazon, with their vast consumer data, started to suggest “people who bought this also bought a no fee Gold ETF, recommended by 17 friends, and it matches your risk profile”, it wouldn’t be a surprise if consumers flock to it. Don’t believe it’s possible? Well, Alibaba, the Chinese equivalent of Amazon, launched a Money Market Fund that attracted US$ 90B in nine months, making it the fastest growing fund in history!

All of this will be hyper customized, because of the rapid rise of big data, advanced analytics, and artificial intelligence. Leading technology companies hold huge amounts of data on you and so are uniquely positioned to deliver the most tailored solution. Why is that important? Because consumers today have developed the appetite for “outcome oriented” solutions versus the “product oriented” push which is how the asset management industry has operated in the past.

In addition, the usual asset management socio-demographic has shifted from a primarily male dominated middle class baby boomer to a culturally, socially, geographically diverse, questioning, tech savvy, and connected global client base with access to sophisticated financial tools once only available to portfolio managers.

On top of this, traditional asset management firms are not even targeting the consumer for most of their assets. The distribution system in place has disintermediated the asset manager from the asset owners, causing an “intelligence gap”. And as customer expectations of service and experience keep rising, firms need to a much more customer centric façade with all the machinery behind it geared toward serving their customer better.

The asset management sector is slowly realizing that it needs to embrace technology to become more customer centric to remain competitive in the changing landscape.

To learn more, visit http://www.3ds.com/financialservices

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