Where are they investing and how are they organizing their efforts?
Asset managers’ views on the benefits of ‘going digital’ are wide-ranging, but broadly, they are seen under the following three target outcomes.
Improving client engagement
Digitizing processes with a view to improving connectivity and strengthening relationships, primarily with clients but also with suppliers and employees. For example, using biometrics to identify clients, thus avoiding the need for them to go through clunky, password-driven recognition processes.
Improving efficiency and controls
Reengineering current processes and leveraging technology to drive lower costs, efficiencies and increase margin while improving risk management and controls effectiveness. For example, deploying digital technologies to collate all of the information required for client investment reports and then delivering the reports via a secure digital portal.
Improving business management
Harnessing structured and unstructured internal and external data to empower strategic insights, increase visibility into client behavior to support more rapid and robust business decisions. For example, using advanced analytical techniques and tools, managers can ingest large, complex data sets in near real-time and deliver insights or ‘nudges’ via mobile devices to field sales staff, identifying which advisors in their territory are most likely to be receptive to a sales pitch about a particular product.
Where are the digital dollars being spent?
In terms of the allocation of their digital spend, most asset managers are choosing front office over back office. Front office functions were the biggest focus of digital investments, with 35 percent of respondents giving top priority to marketing, sales and distribution and 32 percent to their investment activities. By contrast, just over one in five respondents put the most effort into digitizing back office control and support functions (e.g. risk, compliance), and even fewer gave priority to middle office functions (e.g. operations). Interestingly, firms with US$50 billion or more in AUM are focusing more effort on marketing, sales and distribution functions, while smaller firms focus more on middle office investment operations.
How are digital programs being resourced?
When asked about their firm’s organizational structure for digital program delivery, half of those surveyed say they use a mix of in-house resources and multiple third-party service providers. Far fewer respondents rely solely on in-house resources or on a single service provider, and only a handful outsource their digital programs entirely. Within this minority of respondents, only larger firms use just in-house resources, while only smaller firms partner with just a single provider. This result is not surprising. The key is ensuring that the right capabilities are available. Larger organizations have a greater capacity to build capability in-house, while also being able to access specialists when required.
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