While 95% of asset managers in North America believe that their technology, data and digital capabilities will be competitive differentiators by 2025, many remain in the early stages of adopting disruptive technologies, including artificial intelligence (AI) and cloud, according to a new report from Accenture.
The report, 'The Future of Asset Management', is based on a survey of 250 senior asset-management executives in North America and includes respondents from 17 of the 25 largest asset managers globally. It notes that while cloud-native technology could provide asset managers with numerous benefits - helping them scale their businesses rapidly, lower costs, improve the customer experience and gain better access to data - only 8% of those surveyed have completed their cloud journeys.
AI still a dream for many
Asset-management firms are also in the nascent stages of adopting AI - less than one-third (28%) are experimenting with the technology, 38% are deploying it across targeted business groups, and just 17% are in the more advanced stage of scaling AI across their organisations. Properly harnessing and applying AI will be critical for product development, alpha generation and delivering a differentiated customer experience, according to the report.
The report notes that asset managers’ product strategies are evolving faster than their ability to operationally adapt, putting pressure on firms to implement more flexible and scalable operations and technology. For instance, more than four in five (85%) asset managers believe they need to radically restructure and redefine their investment operations to focus more on competitive differentiators, including performance, client experience, and breadth of offerings.
"While asset managers are confident about reaching their strategic visions by 2025, operationally there’s a lot they need to achieve before that can happen," said Mike Kerrigan, who leads Accenture’s North America Asset Management industry group. "Asset managers need to reimagine their operations; embrace cloud, AI, and data analytics to reduce costs; and, more importantly, create greater agility across their operating model and platform architecture. Getting there won’t happen overnight, so aligning capital investment, vendor partnerships and internal talent will be critical."
Personalisation is key
The report notes that as alpha becomes more difficult to attain, it’s becoming more important for asset managers to create personalised products and services that can help improve the customer experience. To meet this need for personalisation, four in five (83%) asset managers are looking to expand into new investment products and strategies, while three in four (74%) are considering expanding their products and services outside of investment products, including acting in advisory or consultative roles for investors, advisors and distribution partners.
The report also suggests that improving product distribution will be even more critical as asset managers increasingly consider selling directly to consumers. For instance, nine in 10 respondents (91%) said they intend to transform their product distribution value chain within the next five years. Although doing so will require new technology capabilities, according to the report, less than one-third (28%) of respondents said their firms have already implemented new technology platforms.
"The path forward for asset managers is clear, but whether they will have the right technology, data and operations capabilities in place by 2025 is the critical question," said Girard Healy, a managing director in Accenture’s Asset Management industry group. "Firms need to determine whether their core competencies are really creating a competitive advantage in today’s marketplace. As product shelves across the industry get smaller, asset managers can’t assume that their brand or legacy reputation will carry enough weight in the battle for shelf space. The bar has been raised - firms need to double down on technology and investment capabilities, and create a meaningful experience to deliver 360-degree value for clients."
Accenture conducted field research across the US and Canada in late 2020 to better understand asset manager’s priorities for today, tomorrow and into 2025. Accenture surveyed 250 senior executives at asset managers - including institutional, retail, alternative and hedge funds - in North America. The survey featured 17 of the 25 largest asset managers globally. The executives were evenly aligned to one of seven business functions: investment management, operations, marketing & brand, technology, product, distribution, and strategy.
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