Even before COVID-19 hit the globe, the asset management industry was grappling with the need to evolve and transform business and operating models due to several converging factors. While firms are seeing a record amount of growth in assets under management (AUM), profitable revenue growth has become harder to achieve alongside increased global competition, the rising cost of regulatory compliance and tax reporting, and downward pressure on management fees — leading to margins moving towards historic lows. Attracting the next generation of clients while preserving the current client base is now critical to drive top line growth while enabling digital services is paramount to serving clients in the new reality.
With client expectations for fast, frictionless interactions and personalized services growing and increased transparency to their investments, the need to increase insights and understand the customer has become a priority with 38 percent of companies in this sector planning to transform to re-emerge as a result of COVID-19. By understanding segments of clients, companies in this sector can develop digital channels and services that best serve each client and meet their expectations as well as use data to identify the types of assets that would help clients achieve their personal goals. As global demographics change, asset managers will need to be more closely connected to adjacent services like health care, retirement, charitable giving, and tax planning for current clients. For the next generation of clients, asset managers will also need to provide access to services such as regular updates on asset performance, news and blogs that affect assets, and financial educational resources. To enable new digital services, as well as reduce legacy costs, asset managers have been focused on increasing investment on their infrastructure, data and insights platforms, and systems of engagement.
These forces mean that, soon, asset management is expected to increasingly transition from being a traditional financial planning industry to a technology powered engine with global investment expertise. It will also be critical in helping shape a new economy based on notions of ‘stakeholder capitalism’ and sustainable business — as interest among large investors such as Sovereign Wealth Funds (SWF) has grown to have their portfolios aligned to their values and ESG agendas. Responsible, values-driven investment has become key to the strategic agenda with delivery through digital customer platforms.
On the face of it, investment priorities in the asset management sector are not dissimilar to the overall cross-sector picture — but what stands out on closer inspection is the margin by which improving security, privacy and customer experience and engagement are top priorities (60 percent and 50 percent). This underlines the extent to which understanding and enhancing customer engagement while securing client interactions has become an imperative. The emphasis is on customer-facing technology-enabled change, such as investor portals and mobile apps to access accounts and asset information, to bolster digital channels and improve the investor experience. To deliver on this customer expectation, organizations also need to invest in connected platform technologies and automation throughout their front, middle and back office to gain access to the data that delivers the level of transparency, modeling, and guided investment options to the investor.
While KPMG firms are some of the largest providers of services to asset management organizations globally, we take a boutique approach to client issues with a focus on flexibility, adaptability, and innovation. We recognize that there are many on-ramps to supporting IT transformation and we’ve tailored our services accordingly: