Digital now a top agenda of asset and wealth managers

08 September 2020 Consultancy.uk

Asset managers were already facing strong pressure to digitise their operations and client services, and the advent of Covid-19 has only seen this become more important. A recent poll found that over half of such firms expect their digital budgets to increase next year, while none of the respondents consider themselves as “just living with the basics” anymore.

In an increasingly agile environment, intensified by rapid digital innovation, clients now expect more value, a higher quality of work, and a faster delivery of solutions and services. Asset management has been no exception to this trend, with the sector increasingly prioritising digital transformation in recent years.

Before 2020, the rise of digitalisation on the asset management had been gradual. In 2018, for example, more than a fifth of organisations were still finding their digital developments frustratingly fragmented. The global coronavirus pandemic, and the lockdown which was brought in to curb its spread, have led to a hastening of digitalisation among asset managers however.Digital Maturity Across the IndustrySurveying 40 of the largest global asset management firms, professional services firm Alpha FMC has found that as managers take stock of Covid-19, only 23% think that their existing digital capabilities meet client needs, while the majority of 75% said that less than 5% of their workforce occupy roles that focus on the growth of digital. With the remote working which digitalisation enables more important than ever thanks to the threat of future global pandemics, 79% of global asset managers are subsequently considering digital as a top or high priority area, with 55% predicting that their firms’ digital spend will increase over the next year.

The increase in spending is partially linked to the sudden stress test of digital systems provided by the Covid-19 outbreak, highlighting some which might not have been as far along their transformation journey as they previously thought. As a result, 20% more firms now describe themselves as “getting organised” than in 2019. That 68% of respondents are determined to use the evidence to iron out the bugs in their organisation, with 70% of them firms intent on becoming a “fast follower” (a strong digital capability with potential to progress) in the next three years.

Meanwhile, though it is still the case that no firms classify themselves as “digital innovators” where digital best practice is innate, no respondents describe themselves as “living with the basics” anymore either. This suggests that while some asset managers may have moved faster than others, there are no inherent ‘market leaders’ in the sector currently, meaning everything is still to play for among companies looking to get ahead of their competition.

Still a long way to go

While coronavirus appears to have shocked many firms into taking their digital transitions more seriously, there is still much work to be done across the sector in order to meet increasing client demands. Alpha FMC indicated that there are still a number of hurdles to overcome, which are holding back transformation projects across the industry.

For example, Alpha FMC said there may be tension among asset managers around who actually ‘owns’ the digital agenda, which typically sits across Marketing and Distribution practices. Only 12% of the large global firms surveyed had established a separate digital function with a Chief Digital Officer or specific digital lead, suggesting a lack of genuine digital buy-in also reflected in budgets. A majority of 58% of firms dedicated less than 5% of their operating expenses to digital transformation – and if they do not back up their words with action this year, it is unlikely any will push on to be “digital innovators” by 2021.

Commenting on the findings, Kevin O’Shaughnessy, Head of Digital and Agile Transformation at Alpha FMC, said, “This pandemic has posed a whole host of new problems to the financial services sector, but with these changes come a range of opportunities. To make the most of this newfound demand for digital, firms who have long ignored requests for increased budgets from their CTOs and digital leads should take advantage of increased buy-in from senior leadership in order to instigate widespread cultural change across their organisations.”


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