Author: Minotore – minotore.com
Asset management companies are facing many challenges : a competitive environment, the weight of regulatory constraints, management fees decrease, retrocessions framework and changing client expectations.
Aware of the issues at stake, Asset Management companies are adapting, overhauling their processes, adopting disruptive approaches, digitising their activities and rethinking their client relationships.
Main issues for Asset Managers
- The weight of regulatory constraints :
The new challenges facing asset management companies are manifold. The 2008 crisis and successive legislative changes have turned the financial markets and the related businesses upside down. Within the European Union framework, the legislator has been forced to adopt new rules that change the management conditions of industry participants. The revised Markets in Financial Instruments Directive (MiFID 2), which came into force on 3 January 2018, aims to address the weaknesses identified during the crisis by regulating the security and functioning of European financial markets to better protect investors. These new standards bring their own set of challenges and force management companies to adapt (retrocession control issues, transparency, traceability and reporting requirements, etc.).
- The changing profile of investors :
Alongside these regulatory and management constraints (rising costs, competition, etc.), the investor himself is changing. The traditional financing model is in transition with the emergence of a new generation of investors, the “millennials”. In search of alternative financing, they are no longer exclusively financial but also social and environmental. These new connected generations want a client experience that combines societal impact, speed of execution and return: a strong challenge for asset managers.
Digital revolution: what advantages for asset management companies?
“For an asset management company offering active management to its clients, McKinsey estimates that digital technology can generate 18% to 30% additional operating income through improved client experience, a better product mix and strong operational efficiency.
- Technologies to enhance the efficiency and performance of asset management companies
Faced with these challenges, asset management companies are turning to digital technologies such as Big Data, Robo-Advisors, Machine Learning, RegTech, Blockchain, Cloud, Open API, Chat Box, etc. The era of digitalization is underway and these technologies are a response to current constraints, tools that allow to optimize the management and distribution of products, to dematerialize operations, to simplify processes, to go paperless, to make KYC management more fluid, to secure data and transactions, to reduce the number of intermediaries, to reduce costs and to improve customer knowledge.
- The opportunity to rethink the customer relationship and diversify the offer
The aspirations of “consumers” and their lifestyles are changing and breaking the codes of traditional behaviour.
The digitisation of financial activities allows to reinvent the customer relationship to meet the next challenges linked to the connected generation :
“Always connected”. This generation is demanding on its customer experience and expects an optimal connected device. Fast access to financial services, active strategies and online tools accessible at any time, connectivity is essential for these generations who will communicate on their experience and thus feed the reputation of managers.
“Responsible Investment”. Investing yes, but investing usefully, these new clients, who are entering the market younger than their predecessors, are even prepared to accept a lower return in favour of responsible investments.
The “millennials” have overtaken the “baby boomers” and are looking for digitalized and responsible products. This is an opportunity for asset management companies to propose new and innovative offers.
By equipping themselves with disruptive digital solutions, asset management companies can gain in efficiency and performance, focus on their core business, continue to create value and rethink client relations to meet the expectations of new investor profiles.
“The accelerating digital transition in the financial services industry is bringing about a profound change in the way we think. We see many benefits in terms of traceability and transparency. We will therefore be able to support those who innovate by enabling them to set up their activities on secure ground, conducive to development and guaranteeing effective protection for savers who need to have confidence in these new offers.
MINOTORE supports the digital transformation of asset management companies and proposed Different products to reach this Goal : Minotore Digital Platform (Websites Generator); Institutional Video Production, Financial Reportings automatization and more…