Michael Nutley
Michael Nutley 26 January 2023

Financial Performance Sidelines Digital Transformation in Asset and Wealth Management Sector

A new report reveals that the quality of the digital experience they offer won't make or break asset and wealth management firms, but it might make them stand out from the crowd.

Asset and wealth management has always been a sector based on personal relationships, and looks like staying that way for the foreseeable future. The difference now is that firms have to start those personal relationships in the digital space.

This is one of the key findings of a new report by London Research in association with Paragon DCX, The world’s gone digital; why haven’t you? – Barriers to digital maturity in the asset and wealth management sector.

However, the report also reveals that the sector is struggling to prioritise digital transformation; financial performance is still seen as the main differentiator, while digital experience is increasingly viewed as a hygiene factor.

Interviewed for the report, Sanchari Roy, marketing manager (VP) for Benelux & Nordics, Allianz Global, said she didn’t think the quality of the organisation’s digital experience would determine its survival, but it could help Allianz stand out from the crowd.

“Asset managers could extend the loyalty of clients through digital means, whether it’s keeping them informed with interesting information more efficiently, or just making sure they remember your brand,” she said. “That could certainly make them think twice before moving their money elsewhere. But, in the end, if your products aren’t performing, they probably won’t remember the emails you sent them.”

Drivers of Digital Change

The major drivers of digital change in the asset and wealth management sectors are the same as elsewhere in B2B. The customer-base is becoming more digitally savvy, and its expectations of the digital experience on offer are continually being raised by B2C businesses, as Alessandra Canavesi, head of marketing, AXA Investment Managers Alts, explained.

“One important thing we’re working on at the moment is a clients’ portal with interactive dashboards,” she said. ”This is something that customers in the retail financial space are used to; you can log into your portfolio and you can slice it and view it according to different types of charts. In my world, we are not quite there, but we need to do it. Our institutional investors are likely to also be retail investors, and they want to have the same seamless user-friendly experience when they view their products invested with us as they have with one for their private investments.”

At the same time, asset and wealth management companies are under pressure to increase efficiency and deliver higher returns on marketing investment.

The result is that almost everyone interviewed for the report said the asset and wealth management sector is behind the curve in terms of digital maturity, with most saying the same thing about their own organisation.

This is not because senior management in asset and wealth management businesses fail to recognise the importance of digital transformation. All the interviewees said their company had a digital transformation strategy in place. But most also said that strategy had ‘got stuck’.

The C-suite is more concerned with delivering returns to investors in the face of continuing economic instability while, lower down, middle management tends to be both less focused on digital, and highly risk averse.

The result is that most asset and wealth management firms are still at the stage of digitising their existing processes, rather than trying to transform the organisation for the digital world.

Barriers to Digital Maturity

The report identifies a number of other barriers facing asset and wealth management companies in their digital journey.

Regulatory and compliance issues. These affect everything from a business’s choice of media channels to the software tools they can use.

Siloed organisations. Many businesses still operate with separate marketing, digital, and tech teams. Responsibility for digital transformation can sit in any or all of them.

Data sharing. Silos can also hinder the sharing of data across the business. Different teams may be using incompatible software or there may be no incentive for them to share their data.  

Measurement. Tying the impact of marketing activity to business-wide KPIs is challenging at best. It’s even more difficult when individual teams are working to their own KPIs and agendas.

Dealing with senior management. It’s hard to present marketing metrics in a language the board understands, while genuine ROI is difficult to prove. Without ROI, it’s all but impossible to make the case for greater technology investment.

No Burning Platform

The report concludes with a number of recommendations for asset and wealth management businesses trying to increase their digital maturity.

These range from looking for small digitisation projects that can be used as proofs-of-concept, to setting up education sessions aimed at breaking down silos, to establishing a customer- and consumer-first mindset that prioritises not just their immediate clients’ needs, but also those of their clients.

However, the general sense in the sector is that there is not yet a ‘burning platform’ to drive change. As one interviewee put it: “Portfolio management is fundamental, but digital can definitely play a bigger part. Digital immaturity isn’t stopping us from doing business yet, but I can see a time when it will, and that’s when things will really change.”

The report The world’s gone digital; why haven’t you? – Barriers to digital maturity in the asset and wealth management sector is now available to download.

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