Digital technologies: Do or die

Technology will drive significant change across the value chain and affect every aspect of asset and wealth management. How firms embrace this technological revolution will determine success going forward.

While some firms are using technology in specific areas of their business, in the future, technology will become vital for success across the entire business. In our 21st CEO Survey, 70% of global AWM CEOs said they believe that changes in core technologies will prove disruptive to their business over the next 5 years and 71% are concerned about the availability of digital skills in the industry.

The big challenge with this is breaking down the barriers between the business and technology. Firms will not be able to achieve maximum proficiency without having tech-enabled teams and executives.

From investment analyst to data scientist

With advances in computing power, predictive analytics and artificial intelligence, intelligence-powered robotic processes are set to monitor and analyze every public company, as well as other financial and non-financial data, faster and for less cost. This extends to alternative asset classes, with data analytics driving value creation in private equity and real estate deals. Many can’t help but wonder if their jobs will be taken by robots. Though the days of research teams with scores of analysts may soon be over, in the end, people will still make the final investment decisions. But these decisions will be made using strong new sources of data.

Technology will reduce costs and drive outsourcing

Firms have begun to automate or outsource in the middle and back offices to reduce costs. Large regional and global wealth managers and global asset managers will either automate their in-house operations or outsource to third party providers. Smaller firms will outsource to big asset servicing firms or even to global utilities that could emerge for functions such as know your client, transfer agency, trade processing and risk and tax reporting. Technology innovation will enable enhanced oversight of outsource providers to manage third party risk as well as to support data capture. Blockchain networks will emerge and further transform the industry in trading, accounting and asset servicing. Automating the middle and back offices will improve data analytics, providing more information about what’s going on in the business.

The new customer experience

Fintech investment is focusing on changing client engagement to meet the ‘anytime, anywhere’ needs of a digitally-enabled customer, powered by flows of client data. Innovators will harness this personal data through social media monitoring, leading to better client relationships and customized service. In a time of consolidating shelf space, asset managers will use predictive technologies and behavioural economics to augment their adviser relationships, driving servicing and marketing campaigns to achieve greater return on investment.

People in a time of technology

In the future, data scientists will be just as sought after as research analysts. According to the study: Unlocking the human opportunity: Future-proof skills to move financial services forward demand for data analytics specialists is expected to increase by 33% by 2020. Roles beyond data analytics are predicted to transform as well. In fact, over half of the executives surveyed believe that 40% of roles will change in the next 3-5 years. There will be a far more diverse range of skills required, as well as more innovative and agile mindsets. What’s more, firms will need new ways of attracting, motivating and organizing people. And diversity will become more important than ever as firms look to hire the best talent.

Moving toward digital enablement is challenging, especially in an industry that’s been slow to adopt digital solutions. There could be a clash of cultures as the manual practices of the past give way to digital approaches that empower advisers and clients. But the status quo isn’t an option. Asset and wealth management firms that embrace digital enablement are far more likely than less tech-savvy competitors to grow and thrive, even in the midst of disruption. And, as firms embrace technology and reinvent their businesses, it’s important that CEOs must be able not only to run a business but also to understand the next generation of technology.

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Andrew Paterson

Andrew Paterson

National Asset & Wealth Management Leader and Quebec Region Financial Services Leader, PwC Canada

Tel: +1 514 205 5264

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