New research outlines the need for asset management firms to adapt to technological advancements and change their investor profiles to ensure future success.
In the face of a rapidly changing financial environment, wealth management firms are poised to undergo significant change. A recent study led by a research coalition comprising ThoughtLab, Deloitte and FNZ with assistance from Amazon Web Services (AWS) and Genesys found that by 2028, the investment industry will witness rapid transformation driven by digital transformation and artificial intelligence. (AI) will become a critical component of prosperity.
According to a comprehensive analysis combining insights from 250 wealth management firms and feedback from 2,000 investors globally, 55% of executives expect digitally enabled companies to significantly transform the wealth industry. Additionally, 52% of wealth management companies at the forefront of digital transformation anticipate dramatic industry reorganization.
A whopping 69% of executives are confident that AI will significantly transform their company’s operations. At the same time, 47% predicted that blockchain and related technologies will increase the relevance of decentralization in financial services by minimizing the need for intermediaries such as custodians and clearinghouses.
Management also foresees a trend toward commoditization of most products, driving suppliers to offer value-added services to justify fees. Additionally, 39% expect the lines between wealth management, banking and insurance to blur as investors demand more integrated financial solutions.
The study highlights the urgent need for digital and process transformation as Generations Y and Z, along with the growing influence of Generation X and the wealth of emerging markets, begin to shape the investment landscape. The overwhelming majority of investors, especially the younger generation, expect a digital experience from investment providers on par with leading digital companies.
In response to these evolving dynamics, investment providers are elevating technology to a core competency, with many moving toward or already implementing modernized cloud-based platforms. These platforms enable asset management companies to digitize operations, reduce costs, devise new business models, and leverage new revenue streams.
The “Building a Future-Ready Investment Firm” study, conducted in October-November 2023, combines quantitative data and qualitative insights, including the views of an advisory panel of industry experts and in-depth interviews with senior practitioners from 11 asset management firms. We provide it all.
Louis Celi, CEO and Head of Research at ThoughtLab, emphasizes the importance of understanding the expectations and behavior of prospective investors to ensure customer satisfaction. He emphasizes that wealth management companies must rethink their services, workflows, business models and digital strategies to prepare for the future.
Five key actions emerged from our research for wealth management firms looking to prepare for the next investment era.
Digitize customer advice and experiences.
Leverage customer diversity to grow your business.
Leverage AI and digital innovation to improve performance.
Innovate your products to meet future investment demands.
Adapt your business model and market positioning to the new competitive environment.
You can download the full report to delve deeper into the findings and explore evolving strategies for investment companies.
The insights gained from this research are critical as asset management firms transition to a more digitally-centric and investor-centric future. With the right approach, these companies can not only survive but thrive into the next investment era.
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