In Alpha FMC’s 2024 Asset Management Digital Readiness Survey, valuable insights have been gathered from 30 of the world’s best known asset managers, collectively overseeing c. $27 trillion in client assets. This year’s survey, our 7th edition, was conducted amidst continued market volatility, rapid technological advancements and increasing adoption, with managers leveraging these developments to drive scale and efficiency across their businesses.
The survey underscores significant advancements in digital capabilities across the industry. Leading firms are reaping the benefits of their investments in digital technologies, enhanced data capabilities, people and ways if working and deliberate approaches to client experience and associated service models.
How Has the Industry Changed Since 2023?
Last year, our findings indicated that firms were not progressing as swiftly as previously anticipated. This year is a different story, with firms beginning to realize the tangible benefits of their digital transformations.
Evidence of this progress is clear: no firms remain in the “Living with the Basics” category (down from 2% last year), and only 10% are classified as “Frustratingly Fragmented” (down from 19% last year). Additionally, the “Fast Following” category has grown, now encompassing a third of the firms, an increase of 11%.
Key Takeaways
Overall
To achieve a mix of growth and efficiency, firms recognise that they need to bring together a mix of technology, data, people and processes to execute on client and colleague experiences in order to give them an advantage in an increasingly competitive landscape..
As such, the concept of the integrated client platform (which combines the elements noted above) has emerged as a strong theme across all contributors. Fast Followers have made more progress in aligning these elements thank others, but gaps still exist so it is still all to play for…
The following 6 findings play into this overall point.
Achieving Scale through Data & Technology
The need for scale has emerged as the primary motivator behind digital transformation initiatives. Firms are leveraging data and tech to achieve “scale without mass,” enabling them to accomplish more with the same or fewer resources. This strategic focus is evident in their spending priorities, with the top investment areas being Digital Client Servicing (26%), Technology Platforms (18%), and Effective Client Data Capabilities (14%).
Recognizing the Importance of Digital Services and Client Interactions
Asset managers increasingly recognize the importance of delivering services and interacting with clients through digital means. The dual objectives of scaling effectively and enhancing customer satisfaction are key drivers of digital transformation for respondents. A significant tool in achieving this is the implementation of Client Portals, with 60% of firms either having, or planning to develop such portals to facilitate digital service delivery.
Early and Cautious Phase of Innovation and Experimentation
Despite this progress, many firms remain in the early stages of innovation and experimentation. Respondents exhibit a cautious approach to innovation despite considerable “hype” around technologies like Generative AI. Where firms are investing in new technologies, overall spend is relatively low, with approximately 10% of the average digital transformation budget focused on innovation. The use cases for these technologies often aim for productivity gains rather than true transformation, with top applications including commentary generation, translation services, and RFP/DDQ management.
Reorganizing for a Digital-First Model
Adapting to a digital-first model remains a key area where the asset management industry lags behind others in financial services. Only 50% of firms have restructured their digital teams into product teams, highlighting the need to accelerate organizational changes to fully capitalize on a digital-first approach. Governance and organizational setup are significant hurdles in delivering successful digital transformation.
Budget Constraints and Focus on Commercial Outcomes
Budget constraints continue to challenge asset managers, with 44% of firms reporting a reduction in their digital transformation budgets by 5% or more, up from 29% last year. Consequently, leaders must rigorously justify digital investments by demonstrating clear commercial outcomes and focusing on providing return on investment (ROI).
Where are Firms Investing?
Firms continue to invest in core client experiences and the technology platforms that support them, however are also looking to drive efficiencies and AUM Growth/Retention by investing in their Client Data, Sales Enablement and Digital-Led Sales capabilities.
What’s Next?
As referred to above, we now see firms looking to develop their digital platforms further and to coalesce around a suite of integrated client & digital (which we refer to as the Integrated Client Platform). This delivers capabilities to be able to tailor & personalised experiences for different segments and personas, but drive scale by the mastering of data in a single place, sweating core technology platforms, and reducing complexity with global consistent processes.
By progressing to the concept outlined in the diagram below, firms are also able to create the glue between business & technology teams to work together on common goals, and also to highlight where firms can simplify delivery (e.g. reduce the number of vendors and think strategically about how data is “piped” to different client related activities)
If you would like to find out more about this year’s Digital Survey or how Alpha can help your organisation with Digital Transformation, please reach out to us here for more information.
About the Authors
Mark Webb
Senior Manager
Mark is a Senior Manager at Alpha and has over 11 years experience in Investment Management, with significant experience advising Asset and Wealth managers on Digital and Distribution strategy. Mark has helped a number of clients across all areas of the Asset Management value chain, regularly covering client experience design, target operating model design, digital strategy and digital technology implementations.
Andrew Salmon
Director
Andrew is an Associate Director at Alpha. Andrew supports Alpha clients across the full range of Client & Digital topics, with particular focus on distribution, which has been a focus throughout his 20+ years in investment management. Prior to joining Alpha, he led Investment Communications at Vontobel Asset Management for nine years, leading teams focused on strategy and planning, content marketing, RFP, marketing operations, PR & communications. He has also held senior roles at ABN AMRO AM in London and at other consulting firms.
He holds a Master’s degree in Engineering Science from St John’s College, Oxford University.
Chris Dunmire
Director
Chris is a Director at Alpha and has extensive experience in capability-driven content strategy, technology-enabled business transformations, as well as strategic initiative planning, development and deployment across Alpha’s Distribution practice.