In order to keep up with client demands, stricter regulations, and project growth, many financial advisors are turning to smart technology. With the use of technology, those who work in the asset management industry are digitally delegating their tasks, increasing their productivity levels, and fast becoming forward-thinking professionals in their field.
Globally, financial institutions have shifted to the digital world. By incorporating the use of technology into daily work tasks, businesses can benefit from faster turnarounds, lower costs, and more thorough client relations. In this blog, we’ll discuss the future of asset management, how to use technology to your advantage, and whether or not it’s worth adapting to the world of FinTech.
The Future of Asset Management Technology
The asset management industry has significantly evolved over the past 5 years. According to Axios, the value of assets under management globally decreased since 2019. This marks the first significant decline since 2008. The reason for this, in addition to the coronavirus crisis, is that many financial clients are shifting to individual management where they are the drivers of their own investments. On top of that, the new IFRS 16 regulation that took place in 2019 has significantly changed leasing standard agreements.
In a time where expected profitability is low, it’s more important than ever for financial advisors to make strategic decisions based on data. This is where we see the importance of technology come in and the impact it has on asset management trends. Firstly, technology is transforming the customer experience by giving clients direct access to information and services. Secondly, artificial intelligence and data handling are transforming the investment process as a whole. With the use of real-time metrics and data, technology offers financial advisors succinct and calculated information to help aid with forecasts.
With more people taking an active role in their investments, financial advisors are highly advised to adopt advanced technological capabilities into their practice should they wish to excel in the next 5 to 10 years. Those who don’t, run the risk of falling behind.
How to Use Tech to Get the Most Out of Your Management Strategies
Traditionally, the asset management industry is full of tedious and manual tasks. Before the introduction of financial-based technology, portfolio management and compliance duties saw hours being spent on them every day. Now, becoming data-rich is only a few clicks away with the right software.
Automated Data Consolidation
Many companies, large or small, are using technology to assist in time-consuming data processing tasks. While spreadsheets and manual methods were popular in the past, the increasing amount of data asset managers require prove that this is insufficient. Using a centralised, online platform for data asset information can save time and improve productivity levels. With technology, asset metrics can be searched, downloaded, and processed in seconds.
One way to make the most out of your technological systems is to adopt software that’s been tailored to your operational needs. Some financial teams elect to have this software built and designed to be unique to their business. However, this option can be extremely costly in terms of creation, maintenance, and consultations. Furthermore, creating a uniquely designed software will require a longer timeline.
The other option is to invest in a dedicated solution that’s already been built by leaders in the field. Utilising software as a service (Saas) can easily be accessed online and it can be adapted to provide a custom solution for your financial needs.
One of the largest ways technology has impacted the asset management industry is through the trend of system consolidation. Amid revenue pressures and increasing fees, firms and smaller businesses are being prompted to simplify operations where possible. Removing any inefficiencies has become a necessity in gaining a competitive advantage while providing stellar customer service.
What does this mean for asset managers? All IT systems have to be connected where data flows freely and is available in an instant. According to a study conducted by Linedata in 2017, consolidating systems and improving legacy methodologies are proving to be one of the top priorities for investment managers. In turn, consolidating systems can lead to better operational efficiency, easier regulatory compliance, and greater investment performance.
At the core of system consolidation, utilising technology can ensure integrity throughout the investment process. These technological functions include:
- Clear audit trails
- Constant reconciliations of all transactions with custodians
- Risk management analysis
Is It Worth Switching to FinTech?
Traditional financial operations are no longer meeting client demands that call for high-tech options and investment offerings. As more people move their money to self-managed funds, asset managers and firms need to update their systems in order to comply with changing demands.
The future of asset management lies in the basic functioning of technology. Reporting and forecasting will rely heavily on machine learning and artificial intelligence in order to achieve successful portfolio management. Furthermore, it will drive transparency in all financial operations which remains a prevalent issue amongst the asset management industry.
Currently, when it comes to technology’s impact on the asset management industry, there’s a climate of “do or die”. With stricter regulations being put into place, increased pressure to meet compliance levels, and an influx of market-related data, technology is the future. If financial advisors and firms are unable to compete with the current climate and the decline of assets under management, they will struggle to win in this fast-changing landscape.
When it comes down to it, should financial advisors wish to remain competitive – they have to streamline their digital strategy. Adopting advanced technological capabilities and incorporating the likes of FinTech, offering more assets at lower fees with a trustworthy service can easily be achieved. It’s advised that all asset managers look to switch to digitalisation should they wish to become leaders in the financial industry.