Analyst Viewpoints

Related blog posts

A business-led transformation of the operating model can future-proof asset managers

Decisions taken in the past around operating models are hindering asset managers’ ability to take advantage of today’s opportunities.

In order to build for the future, it is essential for firms to take a structured approach to keeping pace with industry and technology change as well as increasing client and regulatory demands.

PwC’s report ‘Asset Management 2020: A Brave New World’ described an industry faced with numerous global opportunities, balanced against just as many challenges. The industry can now add the UK’s decision to leave the European Union to their list of concerns. To stay competitive, asset managers need to become more client-centric whilst simplifying their offerings and reducing the cost of operating models.

Meeting future requirements while burdened by the legacy of past decisions

Many firms operating today are struggling to adapt to the pace of change, and asset managers find themselves in a situation where past decisions are making it difficult to make the most of today’s opportunities for change. It is difficult to decide where to start the change process in order to avoid ending up with a costly white elephant and a repeat of the endless ‘Data Warehouse’ projects that still frighten many in financial services IT today.

So, what is the best way forward? One thing is certain – you need to consider business-led technology and data transformation.

Ian Woodhouse and Paul Mawson from PwC, Asset and Wealth Management

Ian Woodhouse and Paul Mawson from PwC, Asset and Wealth Management

Choosing to simplify, standardize, and leverage technology and data

Many firms are revisiting the foundations of their businesses and looking at how they can leverage FinTech. When facing the demand that ‘less needs to mean more’, firms have to consider this angle in their investments.

There has been a growing trend over the past few years to implement cross-asset class platforms to reduce the reliance on fragmented best-of-breed architecture and to provide a more consistent set of capabilities to the front office. These front office capabilities provide a richer set of tools, but perhaps most importantly, a consistent set of definitions for core business processes and their associated data. The outcome is a much higher level of satisfaction of the increasing stakeholder needs.

The advantages of better data management can be multiplied by FinTech

The benefits of improved data management are numerous, however, achieving better data management requires a more systematic approach than in the past. It will take an enhanced data strategy, which should be accompanied by a greater focus on data governance around a more integrated model with a single source of data.

Better data management supported by advances in technology, data and analytics can provide firms with an information advantage through improving the speed and quality of client reporting. It can also allow greater personalization through a deeper understanding of client needs to enable better targeting of product offerings. In addition, compliance data can be streamlined and better evidenced to provide increased control with a reduction in both costs and risks.

Asset managers who are adopting the principles of simplification, standardization, and beginning to leverage opportunities in digital and FinTech are achieving business benefits with initial savings of 10 to 20 percent and higher satisfaction of stakeholder needs.

Several asset managers have moved to partner with or acquire FinTech companies in order to extend distribution through adopting direct to consumer (D2C) or hybrid robo-advisor models. In the middle and back office areas, we see that several asset managers are also working with FinTech firms to embrace artificial intelligence, robotics, and several are also exploring the potential of blockchain technology.

The degree to which FinTech is shaping Financial Services should not be underestimated, and the cultural challenges faced when incorporating innovation into an incumbent business also need to be considered. An environment of rapid innovation needs to be welcomed, firms need to accept the need to fail in order to succeed, and creative thinking in strategic planning and delivery should be embraced.

The time to act is now

With so many trends and challenges moving at such great speed it is easy to underestimate, or miss, emerging opportunities. As an important starting point, asset managers need to gain visibility of the impact of trends on their business, and to know where they currently stand in optimizing their operating model and leveraging data management capabilities in this context to realize their future potential.