Digitising investment management is no longer an option

Wednesday 15 July 2020

Digitisation

Author: Kate Webber

The impact of Covid-19 is accelerating the digitisation of asset management – and has likely already transformed our industry, says Kate Webber

The last decade has seen transformational shifts in the way that we, as consumers, interact with the companies with which we choose to do business. We shop online for physical items, which we then expect on our doorstep the very next day – an on-demand experience. 

The integration of technology into our daily lives means many of us are influenced, however subtly, by social media – even if we choose not to actively participate in it. Resulting information is everywhere and provides businesses with invaluable data and metrics on consumer behaviour. 

New experiences – and expectations?

While data and digital technology are increasingly central to success, it’s no secret that the asset management industry is often viewed as lagging behind others in deploying it on a significant scale. A number of reasons exist for this, with one of the most commonly-cited being the demographics of a high proportion of our consumers. 

Societal groups such as the wealthy-retired have commonly been portrayed across the industry as disinterested in digital servicing. But as recent weeks have confirmed, age is no barrier to online activity. As the coronavirus confined most citizens of Europe to their homes, the digital platforms used to create connectivity fast became communication tools of choice. 

We’ve seen rapid, widespread adoption of digital tools for everyday tasks – for example chat functionality to communicate with doctors and a surge in online shopping. This confidence to use technology – born in many cases from necessity – will surely transform how investors choose to communicate and be serviced going forward. 

Furthermore, this digitisation of a new societal group aligns them with the upcoming wave of tech-savvy millennials and Generation Z investors who already use online and mobile channels as their preferred method of business interaction. The consequences – and opportunities – for our industry are likely to be transformational. 

Digitisation: a strategic imperative

Asset servicers, in providing fund administration, global custody and data-orientated services to investment managers, have seen how current conditions create new challenges for the industry. But the impact of Covid -19 also demonstrates the strategic importance of digital transformation. The need for digitised investor communications, real-time, high-quality data – and tools to help users make sense of it – is more relevant than ever. 

Every day we see the pandemic acting as an accelerator driving the need for on-demand services. It has created changes in the ways we all function – from fund administrators to asset managers, institutional and retail investors. 

For example, postal volumes have fallen away from normal, driving the need for electronic delivery and receipt of communications. At Northern Trust we don’t expect to return to past practices post-pandemic – rather, the solutions developed for electronic delivery of investor information will be our 'new normal' going forward. 

Towards an on-demand data future 

If we accept these trends are transformational in nature, so it follows that our industry must find ways to service institutional and retail clients in an on-demand way. ‘On-demand’ in this context means enabling asset managers to interact with their investors flexibly and coherently, and to be able to see all their investments in one place. To achieve that, our industry needs to find new ways of managing and delivering investment data to our asset management and wealth management clients, from distribution managers to chief operating officers, delivering information from the same data source but tailored to their need.

In this on-demand environment, data and metrics on consumer behaviour will be invaluable for asset managers’ decision-making – just as it already is for the businesses I mentioned at the outset. The availability of investment data – for example, on fund flows or investor on-boarding – will be critical for asset managers in making well-informed decisions on key challenges such as growing their assets, meeting regulatory obligations and controlling costs.

A new service era

The scope of the Covid-19 pandemic means few lives will be unaffected. Changing approaches to how services are delivered and how we interact with one another will be notable by-products of this period – taking us into a new service era for investment management. 

This has the potential to fast-track the way that investors, both institutional and retail, choose to interact with their asset managers and service providers. In fact, it is likely already doing so right now – and if so digitisation is no longer optional. 

Kate Webber, Global Product Lead, Fund Services at Northern TrustKate Webber is Global Product Lead, Fund Services at Northern Trust

 

 

 

 


 

 

 

 

 

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