Asset managers should do all they can to embrace technology developments or risk sliding out of contention as providers of investment products and services, according to the findings of research into fintech changes affecting the industry.
SEI’s paper titled The Upside of Disruption: Why the Future of Asset Management Depends on Innovation comes as an estimated 4,000 active fintech startups are looking to areas such as banking and transactions, wealth management, risk analysis and portfolio optimisation.
This has profound implications for asset managers, says Stephen Meyer, executive vice president and head of SEI’s Investment Manager Services division, which published the paper.
“In effect, every company is now a technology company. Any investment firm that isn’t focusing on that reality needs to reboot its thinking,” he said.
The paper identifies five key trends affecting asset managers, including:
Watsonisation – Cognitive computing systems that can interpret massive quantities of data, learning as they go, will hold an information advantage over today’s stockpickers and analysts. They could also give investment firms powerful new tools for interacting with investors, assessing risk, enhancing cybersecurity, and fail-safing processes.
Googlisation – The rapidly growing abundance of information is challenging asset managers to be more strategic and sophisticated in their approach to data management. To stay competitive, investment firms will need to recruit top-flight technologists and be more data-driven in all aspects of their business.
Amazonisation – The online platform phenomenon is levelling the industry’s playing field and lowering barriers to entry. Meanwhile, e-commerce giants such as Amazon and Alibaba are rapidly moving into lending and investments. Investment managers can’t afford to ignore the power of Web-based platforms to engage investors, enhance the investor experience, and bring more discipline to business functions.
Uberisation – While most investment organisations remain vertically integrated, the success of companies such as Uber and Airbnb points to the potential of a different business model: the technology-enabled network orchestrator that can gain scale, lower costs, and improve services by outsourcing more elements in their value chain.
Twitterisation – Asset managers have been slow to use social media platforms and interactive digital media, due in part to regulatory concerns. The industry is now catching on to the ways new media can help investment firms build brand, gain unconventional market insights, and encourage innovation.
To read the full findings of the paper click here: The Upside of Disruption: Why the Future of Asset Management Depends on Innovation