THANK YOU FOR SUBSCRIBING
Madhu Gayer, Head of Investment Reporting and Performance, Asia Pacific, BNP Paribas Securities Services
Just over 21 years ago, in July 1995, Amazon sold its first book – Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.The book title may not be memorable, but it’s worth noting the date. Not only is 21 years a relatively short period of time for a company to become one of the world’s biggest retailers, but it means there is now a generation of adults who will have always lived with the ease and instant gratification of online shopping.
Making a direct comparison between retailing and banking is not always helpful – for one, retailers are held sway by short term trends and fashions, whereas banks must play a longer game. However, the drivers which pushed online shopping into the mainstream are very similar to those forcing financial institutions to re-think how they distribute their products – customer demand, technology and, to a lesser extent, regulation.
Modern investors expect modern ways of managing their money. A recent survey of more than 6000 affluent individuals from around the world, found that 53percent prefer to do their banking online or via a mobile application. This figure will only rise – especially as the so-called Millennial Generation and Generation Z (those who have come of age with Amazon) reach the point when they want to invest.
The asset management industry will need to either innovate in-house or look to FinTech firms already shaking things up
Clearly, part of the reason there has been such an uptake in the use of online and mobile technology in banking is because it is available to use. In contrast, the asset management industry isn’t quite there yet.
Fortunately, technology is on the industry’s side. There have already been major advances in how funds are bought and sold over recent years – the prevalence of fund platforms is a good example of this.
However, investors are going to demand much more than simply the ability to buy and sell funds. They will want tools to help them visualise their investments and information that is up-to-the-minute and personalised, not a month old and generic. Investors are also likely to increasingly rely on peer reviews to help them decide where to invest – something else the asset manager of the future will need to embrace.
In order to meet these demands, the asset management industry will need to either innovate in-house or look to FinTech firms already shaking things up. Buzzwords like “big data”, “blockchain” and “artificial intelligence” are already common parlance in many asset management firms and soon we will begin seeing practical applications of these technologies.
It is a very exciting time for asset managers – and for the financial services sector more generally – as technology breaks down barriers, increasing communication and understanding between investors and providers.
This increased interaction will not only enable investors to access the products, tools and information they want when they want, but help providers develop products tailored to investor’s needs.
The next few years are undoubtedly going to be a challenge, as market participants adjust to new ways of doing business. However, the industry which comes out of it will surely be stronger and one more in tune with the demands of clients – being able to meet their investment needs, even if they are as esoteric as a book on the Fluid Concepts and Creative Analogies:Computer Models of the Fundamental Mechanisms of Thought.