The global events of the past 3 years have dramatically reshaped how Asset Managers operate and interact with clients. Digitisation, in all its flavours, has been pivotal to enabling these changes, featuring as a key investment area for Asset Manager worldwide.
In Alpha FMC’s 2022 Asset Management Digital Readiness Survey, we collated views from 40 Managers across the globe, with a combined £22 trillion AUMA. The overarching message from our results is that while Digital remains a focal point, firms need to address a number of challenges in order to see a return on their investments and to help their digitisation efforts ‘come of age’.
A Story of Two Halves
In this year’s survey, we saw two competing views emerging
- On the one hand, there is a positive trend in a number of indicators. The perceived importance, level of funding, and degree of client expectations for Digital have all moved upwards. For example, 97% of respondents say that Digitisation is a top or high priority item on their overall ExCo agenda.
- On the other hand, the overall Digital Maturity levels have not moved dramatically. 63% of firms still categorise themselves as “Getting Organised” and say their ability to execute is a key factor preventing them from maturing. Also, there is the recognition that client expectations (especially in areas such as ESG) are rapidly evolving, and digital solutions will need to be available sooner rather than later.
Addressing the Challenges That Can Inhibit Progress
To achieve their Digital ambitions, firms need to tackle five key challenges:
- The fear that digital efforts could be seen as superficial, and not fixing underlying capabilities or changing the culture and ways of working within the firm. Availability of data and a need for a change in culture are two of the top-cited challenges firms face
- There is a need to provide more robust quantitative and qualitative measurement of the value of the investments made in digital capabilities. Only 2 firms responded that they were making progress around linking commercial outcomes to their digital initiatives
- Firms are still trying to iterate around the traditional operating models. Whilst 72% of firms say they are making good progress on being more agile, the feedback is that these efforts are still siloed to Technology Teams
- Digital initiatives can be fragmented across the firm, not universally applied or led. 44% of respondents say these are co-managed across multiple roles, while 56% say they come from individual departments
- Limited time to consider emerging topics, e.g. DeFi, crypto/digital assets etc. Whilst 56% of respondents have tie ups with FinTech firms, there is a mixed picture in terms of the extent to which firms are actively developing initiatives across a range of R&D topic areas.
Looking at How “Fast Followers” are Building Digital Capabilities
From our findings, we can see that those who are making the most progress have invested in capabilities which allow them to:
- Bring “Digital” into the firm with a clear vision and plan, and tie their efforts to business outcomes for the client and the firm
- Drive strategy and delivery through clear leadership, as well as aligned business and technology teams
- Have the appropriate technology stack & data capability to enable their teams to best service their clients
- Execute more omnichannel activity
- Devote appropriate time to thinking about the future, including engaging with vendors and industry innovators
How Firms are Thinking About the Next Stage of their Digital Journey
Taking these points in account, firms are thinking about their strategies for the next 2-3 years and refreshing their plans. In doing this, they need to ask four key questions:
- Where to play – What does digital mean for my firm, and where can I get most benefit across client-facing, Investment, and Operational areas
- What do I need to do – Designing what this looks like e.g., new digital client experiences or improved automated processes
- How do I make the change happen – Executing well and quickly, requiring improved ways of working and team set-ups
- How do I measure the benefit – developing a mix of qualitative and quantitative measures, which look at the role of digital in supporting revenue goals, efficiency targets and risk reduction
Firms need to focus on the leadership roles required to address these questions, and how to galvanise the “coalition of the willing” (e.g., leaders from Digital, Marketing, Technology, Data & Operations) around a strategy and plan. This will drive both the functional and cultural changes required within the business. Top-down support from the CEO & ExCo is a vital part of this cultural shift.
It is clear that Digitisation as a topic has had to grow up quickly within the Asset Management industry. This is not only in terms of how it is defined, but also in the way it is introduced and embedded into a firm.
The “Forced Experiment” of the Coronavirus pandemic has taught us that this is now the norm and not the exception, so Managers will have to play catch up in the next 1-2 years.
This calls for skilful leadership to paint the vision and bring people along on the journey, paired with strong execution so that firms can maximise the benefits of their digitisation initiatives.
This continues to make it an exciting time for those leading the Digital agenda across Asset Managers; firms who navigate this successfully will gain a competitive advantage.
If you would like to see more of the findings, please click here to receive the full survey results report. Please see our contact details below if you would like to speak to a member of the Alpha Digital & Agile Transformation practice.