Why asset management providers must embrace digital

Buoyed by vaccines and government stimulus, albeit variants of Covid-19 looming as a potential headwind, the U.S. economy is recovering from the pandemic-induced slowdown in business. The asset management industry is buzzing with activity, as they take stock of all that might have changed and what has not in the post-recovery reality. However, some players have a distinct advantage. Through the period of disruption last year, when capital markets were highly volatile but still functioning without notable disruption, some forward-looking asset managers took the time to strengthen their digital and data muscle. They are now applying the advantage across the asset-management value chain – accelerating value for their business.

They are transforming distribution with data. Bringing together client, transaction and external data, asset managers are driving more accurate segmentation by relying on client-behavior data analysis to point the way. In addition to precision targeting that improves the efficacy of sales and marketing campaigns, the data fabric also serves to build a range of predictive algorithms to land personalized recommendations and new opportunities to drive growth faster. For example, last year, an asset management leader partnered with us to rebuild their algorithm models with a renewed data repository to better target customers whose preferences and risk appetite had changed through the pandemic. The transaction data also helps zero in on performance trends within the distribution teams, so firms can know which tactics and strategies work, and amplify them thereon.

They are relying on tech to amplify investment decision-making. Whether it is eliminating systemic bias from the investment selection process, outlining predictive trends around investment performance, joining the dots across various data sets to create a cohesive picture of investments, or simply automating the research process, these digitally strong firms are able to rely on intelligent automation to amplify human effort. A good case in point is an asset manager who drew on our applied AI capabilities to intelligently automate their asset information extraction and audit process. Having significantly reduced manual efforts and rework, they are now able to rapidly onboard new portfolios and enhance customer experience as the markets return to some sense of normalcy. 

They are modernizing their core. These asset management leaders are building their operating model with analytics and automation at the core and on the cloud – greatly enhancing their ability to quickly respond to client needs and to scale impact. A full-service defined contribution service provider, for example, is working with us to build a cloud-based secure recordkeeping platform, enabling greater insights and unprecedented personalization to help deliver better outcomes for nearly five million participants and 1,500 sponsors. Planned enhancements for sponsors included AI-enabled analytics capabilities, improved visibility of participant behavior, and ubiquitous operational support. 

Research continues to point to the fact that although building digital prowess is a ubiquitous priority for financial institutions, several factors ranging from legacy landscapes to legacy mindsets continue to slow progress for the bulk of the industry.

In my experience, adopting Agile as a lever to phase and at the same time accelerate the transition from a rigid home-grown systems landscape to a cutting-edge digital core has proved useful for businesses – especially for those that are not inherently digital but aspire to become more like the digital natives. The pandemic, in fact, has elevated such Agile practices to a business essential – necessary when changing culturally and systematically to address the changing needs of customers. Our research indicates that the value from adopting agile practices is the potential to grow ahead of peers that is as high as 63%. Combined with the prospects that open up with digital transformation, for asset managers, this is undoubtedly the catalyst for a promising future. Martha King is Chief Client Officer, EVP and Head of Retirement Services Center of Excellence at Infosys.