Asset managers must embrace new technology, such as mobile applications and digitised, real-time investor reporting if they are to retain their competitive edge, according to Linedata.
Fund managers have been criticised for failing to embrace technological advances unlike retail banks. A study in May 2014 by MyPrivateBanking Research, an independent research firm, found just 10% of asset managers provided an information app designed to be used by existing investors or prospective investors.
“The asset management industry has yet to fully recognise the benefits of digitisation. Utilising new technology, which can offer investors real-time reporting instead of monthly fact-sheets outlining performance, has enormous benefits. Investors appreciate such technology as information on their funds can be accessed online in real-time, while it can also help bring about cost savings for managers,” said Patricia Regnault-Fouqueray, director of client management at Linedata, speaking at the Linedata Exchange conference in London.
Undertaking investor reporting manually can be time consuming and costly, and there is a strong risk of error creep. Regnault-Fouqueray highlighted that digitized reporting would be particularly welcome by retail investors, although institutional allocators will probably retain their own systems for receiving reports from managers.
A report by PricewaterhouseCoopers (PwC) in 2014 – “Asset Management 2020: A Brave New World” – predicted most asset managers will employ a chief digital officer by 2020 focused exclusively on technology issues within the firm. The report highlighted that just 40% of asset managers used social media, and that this needed to change. The PwC paper emphasised social media, mobile phones and other devices would be crucial for managers to attain big data on their customers, which would enable them to tailor products accordingly.
A failure to evolve will undoubtedly cause enormous challenges for asset managers and puts them at risk from technology savvy market disrupters. A study by State Street in July 2015 found 79% of asset managers feared being usurped by a market entrant which was non-traditional such as a major technology behemoth, for example.
Yu,E Bao, the money market division of Alibaba, the Chinese ecommerce business, has raised nearly $90 billion in less than two years. Meanwhile, there is widespread speculation that Google might enter the fray in what could be a major threat to traditional asset managers.