2020 Survey Results: Digital Op Models in Asset Management

Background

Over the past three years, Shoreline Consulting has conducted industry research across the Asia-Pacific asset and wealth management industry. We recently conducted a survey to assess the industry’s current and planned usage of digital strategies, tools and solutions.  The results of the survey represented a good cross-section of the region with 31 respondents spanning eight countries. Participating firms ranged from global players to boutiques, sovereign wealth funds, pension funds and insurance companies – from those managing less than US$ 10 billion in assets to firms managing more than US$100 billion.

Our survey attempted to take a ‘real world’ approach, focusing on actual solutions we have encountered in practice while avoiding overly broad topics like “Big Data” which are not specifically digital in nature.   Our categorisation of the digital solutions used in the survey are listed in the appendix below.

Key Findings

Some of the key findings of our survey were:

Digital Strategies and Operating Models

In terms of the strategies and approach to rolling out digital solutions, the composite profile emerging from the survey is that most respondents have, to date, deployed digital solutions more opportunistically than according to any pre-meditated, overarching plan.  In addition, while they see ‘digital’ as strategically important, most recognize that investing wisely with an eye to ROIs and anticipated cost / benefits is more important than being first movers.

One in four of participating firms claim to have a clearly defined digital operating model and almost all of that group have been careful to assure that the digital initiatives were initiated within that context.  While the majority do not have a clearly defined model, almost three-quarters of all respondents see it as important to develop going forward.

Digital Priorities

Of those responding, a solid 90% have implemented some form of digital solution.  Operational efficiency and enhancing customer experience have been the most consistent business drivers over time (70% of all implemented solutions) while growing distribution channels and boosting sales have not only been less important but have decreased over time, (36% of all implementations pre-2017 but only 24% since then).

The digital solutions most frequently implemented have been usage of company website and social media, while artificial intelligence (AI) and digitisation of paper environments have also been very popular.  Robo-advisors, digital wallets (eWallets) and creation of integrated omnichannel environments have been the least deployed.

Benefits Realisation

Value delivery has been hard won though encouragingly, an overwhelming number or participating firms (almost 90%) say that the digital initiatives they have implemented have either met expectations or are optimistic they will in the fullness of time.  Company websites, paper digitisation and API integrations have the highest rates of satisfaction while AI and orchestration tools are those that respondents were most hopeful would eventually bear fruit.  Of all digital solutions identified in the survey, only AI and Robo-advisory have failed to meet firms’ expectations.

Getting Easier?

Almost three-quarters of digital implementations have occurred within the last three years.  65% of respondents say that their implementations were in line with how difficult they anticipated, 21% say they were more difficult than expected while very few (14%) say it was easier.  Interestingly, none of the tools stood out as being particularly easy to roll out but several stood out as being the most difficult.  AI and partnerships with digital providers, in particular, were the most difficult to implement and while digital wallets and robo-advisory were not frequently implemented, both appeared to be difficult to implement as evidenced by half of those saying it was more difficult to implement than expected.

Latecomers to the digital game do seem to have one clear benefit: implementing digital solutions seems to be getting easier relative to expectations.

Looking Beyond Covid

Most believe that Covid-19 has already accentuated the importance of digital in Asia-Pacific asset management and even more (82%) believe the role of digital will increase post-Covid.  A similar percentage of firms (71%) also expect their firms will invest more in digital as the pandemic subsides.   

Unsurprisingly, firms that view digital as a top priority target see themselves as being 76% ‘digital’ (versus more ‘brick & mortar’) going forward while those that have been more cautious in their digital investments see themselves currently as only being 48% digital with a target of 70%.  Those firms for whom digital is not a key aspect of their operating model consider themselves only 33.5% digital and target 45% in the future.

As for those digital solutions that participating firms have yet to deploy, digitising paper environments and utilising company websites are the most certain to be used while exploring partnerships with digital service providers and API integrations are the solutions most frequently identified for possible use.  Digital wallets and robo-advisors are areas where respondents showed the least certainty in terms of future deployment.

Appendix:  Categories of Digital Solutions

The term “digital” in industry literature tends to be driven by vendors and consultants and defined in the broadest of terms – and can include anything from process re-engineering to ‘Big Data’.  Our survey adopts a real world approach, comprising only those solutions which we have encountered in practice in the asset management industry.  Definitions of the types of digital solutions we included in the survey are listed below:

• Social Media – pre-meditated or coordinated use of a social media channel for a specific business purpose.

• Company website – use of a company-branded website for specified business purposes, broadly defined.

• Company-branded Mobile Apps – a computer program or software application designed to run on a mobile device such as a phone, tablet or watch, specifically branded in the company’s name, logo or images.

• Digital Wallets – an electronic device, online service or software program that allows one party to make electronic transactions with another party.

• 3^rd party Client portals – an electronic device, online service or software program that allows one party to make electronic transactions with another party.

• Artificial Intelligence (AI) – simulation of human intelligence in machines that are programmed to think like humans and mimic their actions; examples offered in the survey included Robotic Process Automation (RPA), Automation Chatbots, Machine Learning, Predictive Analytics.

• Robo-advisors – a class of financial advisor that provides financial advice or investment recommendations online with moderate to minimal human intervention.

• Partnerships with digital providers – as a means of accessing digital tools, mechanisms or solutions rather than building such capabilities DIY style.

• API integration – an ‘Application Programming Interface’ which enables interaction between data, applications and devices; a common usage is to allow a company to sell its products and services online.

• Omnichannel environment – integration of physical and digital channels to present a unified, consistent customer experience.

• Orchestration Tools – unlike automation, which refers to a single task, orchestration arranges numerous tasks to optimize a workflow to make complex business processes run smoothly.

• Digitisation of paper environments – capture and storage of paper-based information to a digital environment; achieving a paper-less working environment.