The Subtle Change Asset Managers Need for Digital Transformation


It’s a subtle change in strategy but a shift from a “customer focused” to a “customer centric” approach can make all the difference when it comes to digital transformation for asset managers.

At a time when asset managers face sluggish returns, fee pressure, cost constraints and a shifting regulatory environment, firms are turning to digital investments to help offset competition, cost and compliance challenges. Sitting high atop the list of the most urgent digital transformation priorities are risk management (59%) and trading and execution (35%), according to Fortune Knowledge Group survey of 51 asset management senior executives.

But while asset managers are prioritizing the digitization of core services such as risk management and trading execution, additional transformation of customer engagement is lagging, especially in contrast to consumer brands. The focus for asset managers tends to be on the infrastructure to build new products and funds for the customer instead of how to get the funds into the customers’ hands (i.e., fund marketing and distribution).

 

Brand and experience

One of the primary drivers pushing asset managers to digitally transform is competition. What stood out within the Fortune survey results is that compared to other industries, asset managers are far more concerned with competition. However, when firms are more intent on allocating their additional spend on the infrastructure to build products, they miss out on a key competitive advantage.

For instance, Vanguard picked up 54 percent of flows into mutual funds and exchange-traded funds (ETFs) in 2016, according to Morningstar data reported by the Wall Street Journal. That’s not because they are necessarily the best performing funds or the most innovative. Vanguard has one of the most unique value propositions and brands in the market as a leader in low-cost investing.

Optimizing your infrastructure is really more a means to an end to free up your funds to compete. But competition should be your guide when thinking about digital transformation investments. To earn those fund flows, you should use marketing to hone in on customer journeys to drive value understand the customer’s needs better than anyone else at each stage of your engagement from initial outreach through to investment selection and beyond. That requires making marketing teams more accountable for both market differentiation and return on investment.

 

Marketing to drive value

Although asset managers are very concerned about competition, operational efficiency was the central driving factor for digital transformation efforts, according to the Fortune Knowledge Group survey. And within most firms, there’s an interesting tension between investing in competitive capabilities versus investing in operational cost savings.

This tension is felt really acutely within marketing across the industry. Asset management marketing teams feel they don’t run marketing campaigns but rather carry out sales enablement. That includes processes such as fact sheet production or quality assurance.

What’s more, marketing often isn’t given the budget they need. The challenge is twofold. On one side, marketing isn’t being held accountable for achieving ROI. So when there are limited budgets for investing in digital transformation, marketing is lower on the priority list.

On the flip side, from a marketing perspective, the opportunity to engage a customer is pretty limited if you’re only producing a fact sheet. If some of the more manually intensive and time-consuming production efforts are outsourced, there’s more time to spend understanding your positioning in the market, your customers’ specific or individual needs, as well as how you to enhance functionality to deliver your messages with digital technology (e.g., cloud, AI etc.) or third-party vendor capabilities.
Digital technology can then be leveraged to test and validate if your message is actually moving the needle to drive new leads and assets.

 

How to win

Winning asset management firms embrace customer centricity. However, most firms start their digital transformation with infrastructure rather than customer experience.

If you’re looking to turn the tide in an increasingly complex and commoditized environment, you must focus on how your services are actually addressing a customer need and the value proposition that is authentic to your organization.

That means overcoming the tension between working in a cost-constrained environment and transforming digitally. Optimizing marketing operations is a way to realize some of the cost reductions you’re seeking, and also help develop differentiated and customized content that ties into the customer engagement sales cycle in ways that are actually relevant to the end customer.


Click below to watch our webinar with FTF News “Digital Transformation in Asset Management: What Does it Take to Win?”, or contact us at info@SapientRazorfish.com for more information.

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