This article is written in two parts. In Part 1, we talked about the headwinds the fund management industry faces worldwide. In Part 2 here, we discuss some of the recommended approaches to tackle these imminent problems.
The million-dollar, maybe, even a billion-dollar question is – how can the fund industry undergo a digital transformation that is seemingly happening everywhere else?
First, let’s begin with the 6C’s guiding principles for a digital transformation:
- Calculated – Digital transformation needs strategic thinking and a strategic approach. Quick fix bandages can help but not for long
- Championed – This is a mindset that needs to be driven from the top-down. Digital transformations need champions within the management team
- Constructive – Changes are not going to happen overnight. There may be some low hanging fruits that can be targeted but it is a systemic process
- Curated – A principled approach to digital transformation does not bring overnight changes to technologies, processes, team, etc., but brings along the change with a more involved approach
- Consensual – Governance and change management is critical. Additional personnel may have to be brought in, existing processes redefined or revamped, and existing team reskilled. The team at all levels need to be educated, assured, and brought along for this journey
- Customised – Lastly, there is NO one-size-fits-all approach to digital transformation. What works for another may not work for your organisation. Every journey has to be tailor-made for your organisation’s wants and needs.
What outcomes can a successful digital transformation journey bring about for the fund management industry?
According to a McKinsey report, “Achieving Digital Alpha in Asset Management”, asset management and wealth institutions that have adopted digital transformations have doubled their overall AUM growth, reduced operating costs by about 50%, and increased profit margins by about 70%, on average. By automating some of the workflows and manual processes involved, firms have saved upwards of 75% of the costs involved.
When looked at from another perspective, by offering an exemplary and personalised digital experience for the customers, it ensures quicker onboarding of customers, better customer retention, lower customer acquisition costs (CAC), and higher customer lifetime value (LTV).
Customers also gravitate towards companies that offer better value and experience for their money. By moving away from simple delivery of services to experiential value creation, companies can look to get a larger share of the investors’ wallets.
So how should companies go about this?
The transformation should be driven by a need to place investors first, serve what’s right for the customers, deliver value-driven products to markets faster, and operate more efficiently.
Companies should start by putting users first. For e.g., an investor-focused approach would augur well for a successful digital transformation for asset management companies. A willingness to think big, a readiness to shun the black box mentality, and a mindset for continuous innovation are also crucial.
Where do they start?
Here are quick-win initiatives that fund & wealth management institutions could take up to kick start digital transformation:
- Data access and democratisation – fund institutions should look to democratise their fund data for 2 reasons. Firstly, by making fund data readily and easily available, funds enable potential investors to make quick decisions. Secondly, as more funds share data, funds also know their benchmarks and their relative standing from a larger industry perspective.
- Process automation – automating a multitude of manual tasks such as fund data flow, fund and investor reporting, customer communications, etc. can lead to quicker deal closing, better real-time data for improved decision making, and also improved bottom lines.
- Digital onboarding – paper-based processes are still a bane for the fund management industry with compliance issues, data errors, redundant workflows, etc. being commonplace. While regulatory processes may not allow onboarding to go completely digital, funds and wealth institutions can still enable digital onboarding until the last mile, bringing a better customer experience, compliance, and huge cost-savings.
- Customer 360 – either through native or 3rd party digital platforms, institutions can have better insights about their customers. Every digital platform, when rightly built, can give far-reaching insights about customers and their interactions. This can help companies identify the right solutions and channels for lead management.
- Digital interactions – digital interactions enable better real-time communications and improved distribution efficiencies. It reduces the number of interactions and turnaround time, thereby reducing customer acquisition costs and improving operational ROIs.
How can Fintuple help?
Fintuple’s Digital Fund Infrastructure provides a technology backbone for the AMCs and the wealth institutions. Fund-focused organisations can leverage our product suite to quickly stand and scale up a custom, white-labelled digital platform for their fund portfolio.
Using our platform, fund and wealth organisations can:
- Standardise and publish fund data
- Automate data aggregation and flow through of fund and investor portfolio data
- Automate fund and investor reporting
- Enable digital interactions with investors and others in the ecosystem
- Enable digital onboarding for new investors
- Get customer insights and automate marketing tasks
- Manage back office operations pertaining to data sharing, communications, and reporting