In the age of digitalisation, Fundsquare's Paolo Brignardello outlines key strategies for asset managers that want to remain relevant to investors.
Not only will digital transformation cut costs and fees, it will enable fund businesses to harness data to improve the customer experience. In other words, digitisation will facilitate strategic planning, deliver tailored solutions and monitor market relevance.
Marketing activity based on presenting investment strategies, in the hope of building trust, is no longer enough. Customizing interactions with investors and distributors is now the key to building a relevant brand. Communication must be tailored to clients’ profiles to build existing investors’ trust, and as a tactic for converting new leads into clients. Marketing analytics need to be enhanced with cross-organisational data, plus feedback loops with distributors and investors to power greater understanding of the competitive environment.
In addition, the investor journey, from on-boarding to transaction processing, must be digitised and more effectively monitored along the entire distribution chain. There can be no question of losing a new lead after a few clicks on app or websites.
Head, Product Management & Marketing, Fundsquare
Staying relevant in a market increasingly driven by digital innovation is likely to be a central challenge of asset managers over the coming years.
As a benchmarking exercise, it can be useful to look at digital evolutions in other sectors. The travel industry has been changing for some time, showing what can be achieved. This market is increasingly dominated by new, digitally focused players that have transformed the way we plan vacations and buy related travel services. A complex ecosystem of aggregators, meta-search engines and full service platforms has emerged. They have pushed aside old-style agencies, while taking services to the next level. They are doing this by building real online relationships with customers through better understanding of their preferences, and reacting accordingly using agile, interoperable platforms that boost interactions between back-end partners.
How can the asset management industry learn from this experience? Players in the US are leading the way with data analytics tools that are able to better gauge investor behaviour.
Understanding investors’ cultural preferences and relating these to a firm’s own experience can help enrich relationships and create long-term engagement.
However this potential is often limited by the highly fragmented distribution chain that is well known to European operators, with investment funds typically only reaching the investor via an independent financial adviser or a distributor, a fund platform, a central securities depositary, a transfer agent.
The industry needs a more inter-operable ecosystem in which players cooperate to ensure lean processes and efficiencies throughout the customer journey. In addition, more interconnection would let investors’ data flow, enabling more value to be extracted.
Innovations such as the emerging blockchain-based infrastructures for fund distribution will be an enabler. These distributed ledger technologies will deliver cost savings and transparency along the supply chain, and will improve the processes needed for a better client experience. It also offers the opportunity to create innovative, value-added services, as transactions can be monitored simply in real time by every actor.
Staying relevant in a market increasingly driven by digital innovation is likely to be a central challenge of asset managers over the coming years. More than reducing costs, creating a richer relationship with investors will be the rewarded for those able to embrace digital transformation.
Funds Europe, April 2018