What’s Next on the Automation Agenda for Managers?

Kevin O'Shaughnessy, Mark Webb, Emmanuel Abodunrin, Oliver Sebley

Managers have made progress on their automation journey, helped by an active technology vendor landscape

Asset and Wealth Managers have made many technological advances over recent years. There have been improvements in the way that firms work internally, execute operationally, and engage with their clients. This has taken a concerted effort on the part of Managers standing-up programmes of work across the business to develop and deploy technology solutions and new ways of working. A focus of many of these programmes has been the desire to drive efficiencies, and enable teams to ‘do more with less’.

This progress has been aided (and enabled) by a range of established and new-entrant technology players, who have brought high levels of standardization and automation to core Asset and Wealth Management processes. Many examples exist, such as Order Management (OMS) processes delivered via an investment platform like BRS Aladdin, or the sales and opportunity pipeline process that exists within a CRM system like Salesforce.

These offerings have focussed on helping firms execute more efficiently, effectively or intelligently and using vendor expertise to deliver solutions. The use of these industry solutions has increased the speed of delivery, reduced initial investment, and lowered the delivery risk. All of these are reasons why, in many cases, Managers have shifted to preferring to “Buy” solutions versus “Build” them.

Managers now want to find answers, where an industry offering is not readily available

There are still areas within Asset and Wealth Management where a clear, simple and out-of-the-box vendor solution does not readily exist, and has long been a headache for firms of all sizes. Prime examples of these processes include Client Onboarding, Rebates Management and Product Governance, as citied by contributors within our 2022 Digital Readiness Survey. These processes are often complex, bespoke per Asset and Wealth Manager and vary on a case-by-case basis per client. This drives slow, resource-intensive processes which can create poor client experiences and the potential for risks and breaches.

This, therefore, presents a couple of questions to a Manager:

  1. Should I try to build a solution for my own purposes, or collaborate with others to build a solution?
  2. If I do attack the development myself, how should I approach this?

1) Build it Myself or Look to Collaborate

Whilst views on this are anticipated to evolve, we normally see 3 options available – each with different characteristics.

Graphic 1: Building Routes Available to Managers

(A) Build Solutions Internally For a Firm’s Unique Needs and Usage

This is often the starting point. In doing this, firms will tend to blend a mix of available tooling (e.g workflow, data management, automation tools) to “stitch” together elements to try to systemize the process they are focused on.

The outcome tends to be a solution which meets the bespoke needs of the firm, but then requires running or ongoing support and development to keep it up to date and workable. For some firms, this might not be an issue if they see themselves as technology businesses with adequate resource. These firms, however, solely own the delivery risk and technical maintenance on an ongoing basis.

Firms that do this, then need to make decisions on their overall BPM&A (Business Process Management and Automation) platform, the internal skill sets and the governance and operating model they put around it. This has also fostered an interest in “Low & No Code” development [see graphic 2] and encouraged firms to seek re-use of these BPM&A capabilities across other processes.

Graphic 2: How can Business Process Management and Automation Tools Help?

(B) Build Solutions Via a Partnership or Collaborate Cross-Industry

An alternative approach is to consider partnering or creating some form of a consortium to solve for issues which are common to each Manager. Whilst this might be a less well-trodden path in Asset and Wealth Management, there are many examples of this across other areas within Financial Services [see graphic 3]. In collaborating to develop solutions a group of firms can contribute to the creation of a shared, potentially standard solution to remove the collective headache. This reduces each firm’s individual development risks and ongoing maintenance responsibilities. A consortium of this nature would need a mix of Managers, Change Management Specialists and Technology vendors. Within Asset Management, an example of this is the HUB offering in which State Street, with PIMCO and Man Group as key contributors. The benefits, of sharing the cost and risk whilst also developing something which becomes the industry standard, are appealing but this can be a long and tricky route to navigate and requires a long-term strategic view.

Example of Consortiums in FS
Graphic 3: Example of Consortiums in FS

(C) Build Solutions Internally with a View to Sell to Others

This is the riskiest and (arguably) the most entrepreneurial approach. In these cases, a Manager will take on the challenge of developing a solution which they feel could eventually be turned into a product that is sold and subsequently run across the industry.

This requires a long-term strategic view and also a deep reflection on what the firm wants to be.

We have seen various examples in the Asset and Wealth Management market, with a focus on Investment Platforms (e.g  Blackrock Aladdin, Amundi Alto and State Street Alpha). In these cases, Managers have viewed this as a means to both develop solutions that solve their own problems, and create a new revenue stream. However, this does indicate that a firm morphs from being purely a Manager of client and customer assets, to a Technology company.

As with route (1), there is a strong need for internal technology and business process design capabilities. It also requires a level of commercial and “software solution” thinking to be able to monetize this into something which adds a new revenue stream to the firm.

2) Approaching your Internal Developments

When working with firms on the options above which involve internal development (using industry available tools), we see two approaches. The preferred approach will be driven by appetite within the firm and also the speed of resolving current pain points and inefficiencies.

We think it needs to be viewed from 2 angles:

  • A “Top Down” or Enterprise-Wide View – this involves looking across the firm, and using this route to confirm the various use cases and where the biggest benefit might be. This will also involve discussions and choices on an Automation platform (which is a mix of workflow, data/API, process design etc). These essentially become a central capability that is then applied to different business areas/functional processes
  • A “Learn by Doing” PoC/MVP Approach – this involves choosing a specific use case and developing a fix for this using available tooling. The objective being to develop the thinking for a longer-term BPM&A platform by prioritizing a fail fast learning approach
Enterprise Wide Approach vs Targeted Test Approach
Graphic 4: Enterprise Wide Approach vs Targeted Test Approach

We advocate a “Think Big, Start Small, Scale Fast” mantra which means you can set some initial direction and context but get on and execute to learn by doing.

A growing urgency for firms to choose their path and evolve their automation strategy

The urgency around these topics has increased over the last ~ 12 months. This is driven by the challenges that Managers face from volatile markets and economies, increased regulation, shifting client demands, and the need to navigate a fast-moving technology landscape.

Thinking through the “Buy, Build or Collaborate” question for these more challenging business processes will be part of this. As a result, firms will push their internal capabilities around BPM&A to the next level. At the same time, we see that it will take co-ordination and a concerted effort with a leader of peers emerging for a collective benefit.

Firms that can make these decisions quickly and mobilize their resources to bring solutions to market will have a commercial and competitive advantage in the future.

How can Alpha Help?

Please reach out to Kevin O’Shaughnessy or members of the Alpha team here if you are looking for solutions to some of the challenges referenced in this article.

About the Authors

Kevin O'Shaughnessy
Executive Director

Kevin leads our digital practice and has over 20 years of experience driving digital transformation across the Financial Services Sector. He has worked on both the client and consulting side to transform organizations such as Standard Life, Prudential, Royal London Group, Investec, Worldpay, GE Capital and Tesco Bank. Outside the sector, he has worked with well-respected firms in high tech, energy and retail. His work covers a mix of digital strategy, new organizational designs and ways of working (adopting agile approaches), data approaches as well as the delivery of large scale digital programmes. He has contributed thought leadership on the topics of digital transformation and new customer experiences through events, surveys, speaker panels and in various articles. He brings together the mix of business and technology skills needed to shape and drive digital transformation programs.

Mark Webb
Senior Manager

Mark is a Manager at Alpha and has over 9 years experience in Investment Management, with significant experience advising Asset and Wealth managers on Digital and Distribution strategy. Mark has helped a number of clients across all areas of the Asset Management value chain, regularly covering client experience design, target operating model design, digital strategy and digital technology implementations.

Emmanuel Abodunrin

Emmanuel is a Manager in Alpha’s Asset and Wealth Management practice with more than 9 years of experience across industry and financial services consulting. He has managed projects across a range of leading global Banks. His recent experience includes business operations desk optimization, digital strategy, and regulatory change. Emmanuel holds a BSc. in Economics, a MSc. in Finance and has a CIMA Certificate in Business Accounting.

Oliver Sebley

Ollie has over 10 years consulting experience across several FS industries with a focus on Wealth Management (consulting, strategy and complex transformation delivery). He has specific experience in target operating model design, AGILE delivery, technology transformation and automation and emerging technologies.