SDL Financial Asset Managers

Part 1: Asset Managers Look to Digital Transformation But Much Catching-up Needed

We recently published a research report focusing on how the asset management industry is adapting to the challenges encountered this year in the wake of the pandemic shock. Although it centers on European asset managers, the findings are highly relevant to firms globally—and the results reveal that, despite investing in digital tech, many firms have struggled to adapt both to the burdens of agile content delivery as well as the demands of their varied audiences.
 
The ‘Digital Client Engagement in 2020’ report, developed in conjunction with WBR Insights, sheds light on the difficulties faced by asset managers as they pivot from an established, proven face-to-face business model to one that necessitates a digital-first approach. Moreover, the need to accelerate transformation this year in response to lockdowns globally has made the issue of digital client engagement even more critical.

Digital transformation remains a challenge…

The research revealed a number of important insights in this critical area of transformation:

  • Only 28% of respondents consider that implementing technology for improved digital client engagement is a high priority—disappointingly, 37% see it as a low priority with a further 6% not prioritizing it at all. This is despite the fact that that more than half (52%) of firms have had to implement technology to support client engagement more quickly than planned because of lockdowns globally.
  • It is perhaps unsurprising then that the majority of surveyed firms are struggling to differentiate themselves from the competition in this area: three quarters of respondents said they are either behind the curve in this area or struggling to break away from their rivals.  Another 4% have not yet embarked on any form of digital client engagement, suggesting that the Asset Management sector lags overall behind other financial services sectors in leveraging the opportunities presented by digital channels.
  • Firms lack the strategic will to transform, citing deficiencies in innovation and technology investment as reasons why they are being held back. Respondents most commonly identified the issue of legacy IT systems impacting the implementation of new technology (55%) while close behind was the difficulty in modernizing the organization to move away from the traditional selling approaches verified over decades of operation (50%). This combination will continue to challenge the sector in lean times ahead even though the need to adapt is critical to survival, perhaps now more than ever.

…yet the benefits to clients and firms are evident

Ironically, there is firm acceptance that technology projects that support improved engagement with clients do deliver strong ROI in areas like improved customer satisfaction and referral scores, reduced client attrition, lower client management costs, enhanced intelligence about client needs and increased returns from marketing investment.

Indeed, perhaps the most important measure of all, Assets Under Management (AUM), was cited by many respondents as being positively impacted by technology initiatives in this area.

This points to the evolution of the industry over the coming years, with hope on the horizon from a desire to invest in Artificial Intelligence (AI) and Machine Learning (ML) in particular. 37% intend to implement AI within the next twelve months, suggesting that this relatively new area of technology is viewed positively as a key element in the operational response to the pandemic. A further 41% expressed an interest in AI technology, albeit without firm plans in place to implement it. Furthermore, 48% are already using ML, placing it some way ahead of more experimental AI initiatives.

We must remain optimistic that the fallout from COVID-19 does not impede this progress or curtail the desire to better engage with clients through a digital-first philosophy.

Fast-track transformation opportunities for language and content

We sponsored this research because we firmly belief in the transformative nature of technology on people, processes and costs. SDL streamlines the creation, translation and delivery of content from service providers to their clients. We facilitate this for asset managers, banks, insurers and other heavily-regulated industries through AI-enabled language technologies that drive innovation, efficiency gains and client satisfaction.

Download the research report, ’Digital Client Engagement in 2020,’ and then find out more about our solutions for Financial Services providers. And why not read Part 2 in the series, where we look at why asset management firms aren't taking advantage of global opportunities?