Partnerships As The Innovation Engine

Innovation is an essential component in enabling firms to stand out from the crowd and to create streamlined & agile organizations. Until recently, firms in the asset and wealth management (AWM) industry tended to rely on the legacy and traditional ways of meeting customer and business needs. However, due to the current shift in consumer behaviours, demand for work-from-home, and upping pressure on margins, AWM firms are forced to break new paths to fulfil ever-evolving needs driven by the current market trends.

In this article, we uncover best practices in creating an innovative enterprise and assist you in understanding overreaching approaches and common pitfalls firms face while driving innovation through partnering.

Benefiting from Partnerships

Establishing partnerships is a preferred approach by AWM players since this results in increasing the chance of actualizing an innovative idea, distributing the cost of burden among parties as well as leveraging on the expertise of each party. Partnerships become strategically important drivers for innovation. In accordance with Alpha’s market observations, there are three main practices deployed by the AWM players within scope of partnerships as follows:

Approaches to innovation are only not limited to setting up partnerships with FinTechs, universities, public institutions, etc. There are many more approaches in the space of innovation, including driving innovation organically or establishing accelerators and innovation laboratories. In the table below we summarize key approaches to innovation for six well-performing AWM players.

Where Can It Go Wrong?

Such partnerships are observed to be managed via either a formal innovation team or directly linked to C-suites such as CTO (Chief Technology Officer) or CDO (Chief Digital Officer). However, leaders in charge of such positions frequently miss the competencies required for making initiatives work due to a lack of relevant experience.

According to the Alpha’s research, the most prevalent problem is that the global players still find it hard to engage with smaller firms with no track record, well-defined procedures, and infrastructure. It is likely to trigger a clash of culture as the smaller firms tend to be agile while managing companies require scrupulously detailed procedures and approval flows even for minor decisions.

Collaborating with public or governmental institutions also could be challenging due to goal misalignment. Public institutions and universities usually try to advance in public policy or scientific research whereas asset and wealth managers seek alpha. Such misalignment of purpose can lead to a wrong perception of opportunities and discourage partners from collaboration.

All these challenges could lead to value loss. Consequently, the talent and opportunities may become unrealized, and firms may build a negative perception of innovative initiatives.

What Is Best For You?

There is no one-size-fits-all solution, and it is important to select the approach that best serves your organization’s long-term strategic objectives. We have outlined high-level points that you should consider while selecting the best approach towards innovation that serves your organization goals:

Following these approaches can help you make your innovation efforts successful, attract and retain forward thinkers, as well as enabling your company to access innovative thinking and bring new products to the market quicker.

How Can Alpha Help?