As we enter the new decade, you are going to see an unprecedented shift in the asset management industry.
Asset management leaders will need to pay attention to the ever-evolving technology and how it can impact the company’s operating model and drive change.
This 2020 will set out an entirely new operating landscape for asset managers. This article will throw light on some of the trends that are going to shape the asset management industry.
But before that, let’s understand what asset management entails.
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What Is Asset Management?
In simple words, asset management is a systematic approach to building, developing, operating, maintaining, upgrading, and disposing of assets in a cost-effective manner.
It takes into consideration factors like risks and performance attributes, along with costs.
Asset management is applied to both tangible as well as to intangible assets. Tangible assets include physical objects like infrastructure, equipment, and intangible assets include human intellectual, business intelligence, goodwill, and more.
The primary purpose is the realization of the value from assets over their whole life cycles.
Now let’s look at some of the upcoming trends and technology that every asset manager needs to keep an eye on.
Top Asset Management Trends that Will Affect the Industry
1. Sustainability Measures to get More Defined
There is no denying that over the past few years, Environmental, Social, and Governance (ESG) are continuously defining their asset management agenda.
However, in 2020, you will see a more clear set of expectations from the industry. In fact, many organizations are already considering how to drive this down to the consumer level.
It has become crucial that asset managers take their clients’ ESG preferences into account. Some regulators are trying to create standardized taxonomies and disclosure requirements.
This year, you can expect asset managers trying to integrate their ESG data points into the investment process.
2. Cost Takeouts as a Business Strategy
Another critical asset management trend to track is how managers are going to look at the cost structure.
In the coming years, cost takeout will become the highest priority. As an asset manager, your role will be to determine which cost is providing substantiated benefits that can impact the overall investment lifecycle.
Firms will need to see how functions and incurred costs are delivering value – to both clients and employees. Organizations will have more pressure to improve efficiency while maintaining cost sustainability at the same time.
3. Switch from Static to Dynamic Operating Model
Consumer demand is constantly shifting, and yet, there has been no change in the operating models.
Many businesses still run on the traditional, static operating model. But it’s time for them to adapt to a new mindset and acquire new capabilities if they want to succeed.
For starters, firms need to reconsider which activities are of core value and which are non-value added. Secondly, the core activities need to be defined across the organization, including the front, back, and middle office.
In short, businesses need to have a flexible and data-driven model so that they can quickly adapt to the upcoming approaches and solutions.
4. Look for Value in the Technology
Asset managers need to start realizing the value of technology as it can open a new level of agility and efficiency.
If you look at the current scenario, not many asset management firms are leveraging the real value of technology. Their operations and technology are not configured together to execute the firm’s strategy.
But it is the need of the hour. Technology, like applied intelligence and automation, not only helps with cost savings but also increases flexibility and adaptability. You will find some of the asset management firms are already using analytics to forecast customers’ wants. For example, MLM software that helps with multi-level marketing business applies business intelligence to help with commission management, report analysis, and more.
In other words, they are leveraging technology to analyze customer’s behavioral patterns so as to use those insights in providing a personalized experience to them.
5. Get Serious About Data
This year’s asset management trend is going to be all about how to leverage data for analytical purposes.
In other words, data needs to be the main focus of any asset management strategy.
Gone are the days when you could rely on only experiences and understanding of the market. If you want to get a deeper understanding of consumer demand and market shifts, you need to start investing in data-driven, decision-making tools, and processes.
For instance, Field Service Management Software collects data on timestamps, customer feedback, technician skills and utilizations, costs, and revenues that can help provide valuable insights into the service effectiveness.
By establishing a strong data foundation, asset management can design a more agile operating model. That’s why it’s crucial to modernize the data supply chain so that it can help generate intelligent insights in no time.
6. More Focus on the Customers
More and more firms will now focus on creating a customer-centric organizational structure.
Clients’ expectations are changing. They have more options on their hand than ever before. So how do you meet their expectations? Personalization is the solution.
This asset management trend is about replacing the old ways of working and replacing them to adapt to the ongoing shifts in customer behaviors. It requires embracing new technology and managing changes in regulations. This will give your firm a competitive advantage and helps build meaningful relationships with its customers.
Asset managers need to undertake a holistic approach to customer engagement.
7. Improve User Experience
This asset management trend is explicitly about moving away from one-size-fits-all products and services for every client.
As companies are embracing technology, they realize that success lies in creating a successful user experience. It will lead to more conversions, which will drive business growth.
It emphasizes the previous point that firms need to focus on creating custom, personalized experiences for their end-customer. To excel, they need to learn from other industries as well. It’s no longer about just competing with industry peers.
Users’ expectations are changing, and businesses must respond.
8. Proactive With Risk Management
Asset management firms need to rethink how they approach their risk management.
This asset management trend requires businesses to move towards a more forward-thinking approach to mitigate risks. The best way to do that is by leveraging technologies.
For instance, you will see how companies are not prepared to handle cyber threats. They need to develop a holistic environment that can combat any type of machine or human risks on a priority basis. These risks include compliance monitoring, cyberattacks, algorithm breakdowns, and more.
They should actively scan the horizon for the next possible threats and manifest themselves even before it happens.
9. More Disclosure on Industry Regulations
In the coming times, you will see increasing regulatory oversight.
The asset management sector will continue to widen its regulatory scope, especially related to systematic risk and investor protection.
This asset management trend will demand managers to focus on non-financial concerns as well. Some would prefer to get a better disclosure of their funds being used for ESG impacts.
Asset managers will need to start encouraging more diversity. They will need to come up with a plan to figure out how to regulate an industry that is digitally growing.
10. Embrace Culture of Change
Change begins at the grass-root level. For organizations to embrace the ongoing changes, they need to create a culture of acceptance.
Leadership visions and direction play a significant role in it. Organizations need to promote innovation and give their full focus on delivering incremental value. They can’t wait for one year any longer to realize the value of capital investments.
Bringing change can be easy if it gets embedded in the culture itself. Just aligning your goals with large programs and plans is not going to help.
So that’s it. In the coming years, you are going to see some major changes in the asset management industry.
Technology will drive more customer engagement by mining data on both clients and prospects. It will improve operational efficiency, industry compliance, and even tax reporting.
Don’t be surprised if asset management firms start hiring chief digital officers (CDOs).
Keep an eye on these latest Asset management trends and operate your business smoothly.