Digital technologies in asset management are now part of a “do or die policy”, according to an asset and wealth management leader, speaking at this year’s Association of the Luxembourg Fund Industry (ALFI) European Management Conference in Luxembourg.
He discussed that the industry needs to “move forward with [this] understanding” in order to survive in asset management and servicing.
The speaker said that technology-related tasks carried out within the industry were previously performed manually, but now middle and back-office functions are almost fully automated.
The speaker said that because of this margins are getting squeezed and this is “mostly to do with passive funds and regulation”.
He added that the main drivers of this squeeze are environmental, social and governance (ESG) concerns, especially Brexit, which he said would have a “big effect on where our industry is going”.
The speaker said asset managers are “funding the future but finding gaps appearing”, and that there “are massive amounts of capital that we [as an industry] need to help provide all over the world and so it’s not resolved to one place”.
He argued that the outcomes of end investors matter, and that “they are no longer just investing in traditional ways, they want an outcome, they want to be able to do more with their money”.
In the following panel, another speaker discussed how the finance industry is engaging with blockchain, fintech and automation.
The speaker said that the biggest challenge the industry faces isn’t technical, it’s actually identifying the technology that the customer actually needs.
He stated that there is a difference between digitisation and digitalisation. Digitisation, he said “describes siloed processes, which is the view that business to business and business to consumer are different”.
Whereas digitalisation, he explained, “drives behavioural change and describes end-to end journeys”.
He said that these customers expect real time processes in terms of t-Zero, as opposed to TARGET2-Securities.
The industry, he added, is looking for “omni-channel access, 24/7 automation—it is so important.”
“The technology that [clients] start using will determine how you interact with them. The power of blockchain and fintechs are focused in that area.”
He concluded with: “If you remember one thing, understand your customers needs.”
