Author: KiteEdge – kiteedge.co.uk
As part of the recent Investment Association ‘EmTech: Future of Investment Management’ virtual conference, there was an interesting panel discussion on ‘Innovation and Transformation within Investment Management – What is the True Picture and Where do we Need to focus?’ All the panellists agreed that the Asset Management industry is lagging behind the rest of the financial services sector when it comes to innovation, both in terms of ability to deliver and desire to do so. Whilst some firms may not recognise the need for innovation, there are the more enlightened who realise that in order to break free of the herd, it will be critical to their future success.
Sharing knowledge in a dynamically changing business environment is increasingly important for the success of an organisation. Unsurprisingly, knowledge and effective knowledge management (KM) will play a key role in delivering successful innovation. Both Innovation and KM should sit within a single organisational learning strategy, focused on organisational competence. Knowledge is the core component of innovation – by innovating your knowledge management approach and knowledge managing your innovation, firms can achieve the best of both worlds.
Siobhan Clarke, Head of International Investment Operations at M&G Investments, highlighted a significant point that innovation needs to be viewed as truly disruptive, game-changing interventions, not just small iterations – she used the analogy of “not just making the horse go faster, but inventing the motor car.”
These days, technology lies at the heart of most business models and operations. Accordingly, using proven innovative technology will be vital to delivering agile, successful performing businesses. Efficiency and scalability are key goals – being able to get the best information and assimilate it quickly so it can inform investment decisions and client strategies should gain asset managers competitive advantage. Sophisticated knowledge tools using artificial intelligence and machine learning will increasingly be used for rapid analysis of large data sets, research, and predictions to enhance portfolio managers’ skills. All of these tools improve access to information and knowledge, provide clarity for investment decisions and reinforce risk management approaches needed to better manage portfolios.
Networked innovation is a popular approach. Bringing together a series of fresh minds can lead to breakthrough solutions. The more diverse the network, the more radical the innovations can be, and tools now exist, such as KiteEdge Apex, that aid the discovery of previously unknown experts in your organisation allowing these conversations to flourish.
Strategic partnerships for Managers are also key – in order to genuinely add business value, firms should seek and work closely with fintechs who offer specialist solutions that firms can build on top of, adding their own USPs. Genuine collaboration requires working transparently in combination with these firms but will offer a path to achieving major step-changes in capabilities more quickly.
Fundamentally, innovation and KM need to be at the heart of the business for asset managers to continue to succeed and thrive. Above all, finding a willingness to engage will be one of the key factors that will unlock innovation more widely across the asset management industry. Innovation requires a cultural shift in the organisation mind-set away from traditional product-focused to being client-centric so that any changes or new ideas that are proposed are considered first and foremost in terms of how do they help the client? As the IA panel noted, it was very noticeable how large Managers who typically took weeks and months to make changes due to IT restrictions and corporate governance committees were suddenly able to deliver change within a few weeks once the impact of the pandemic lockdowns became clear. Necessity was clearly the mother of invention but it was a clear indication that with the appropriate desire to change things, Managers can achieve change very quickly.
James Flavin, CEO, KiteEdge