Asset management in 2021: Five things to get right
December 19, 2020
December 19, 2020
Asset management has always been partly about managing risk, but as we approach the new year, the marketplace seems riskier than ever: A tumultuous 2020 brought with it a pandemic, a slowing economy, natural disasters and nearly unprecedented political and social upheaval. Within the industry itself, competition has been aggressive, regulations have grown even more complex and the technology landscape has further altered the nature of competition. Is your firm ready for a bumpy ride—though with plenty of opportunity—in 2021?
Given this year’s disruptions, what should be top of mind for asset managers as they look to the new year? Here are five strategic enablers to help you refine your 2021 strategy.
In the past, some firms have looked at cost reduction as a “one and done” program—as in, “Let’s go find 20 percent cost savings.” But the situation is far more serious and could have broader implications. Accenture analysis has found that year-over-year costs continue to eclipse revenue growth. That means that firms should establish a framework and a culture that ensures that they continuously tune process, technology and culture to optimize their cost model and return on investment.
Year-over-year revenue and cost growth in % (2019/2018)
Source: Accenture Research, Capital Markets 2025
Key Takeaways
Companies can work toward cost structure transformation using different levers such as:
The future of product development in asset management will be rooted in the ability to anticipate the needs of retail and institutional clients to create a more personalized set of products—essentially a benchmark created specifically for them. Today, it may be far too expensive to manage that type of structure, but technology could help enable this level of personalization in a scaled manner in the future, and managers should be taking steps to lay the foundation.
Key Takeaways
Take a fresh look at your offering and product portfolios:
As we wrote in last year’s “Trends” report, operating model transformation is essential for success in the asset management industry. Today, though, that transformation is especially focused on agility in the way you run your business. How can you get your business and technology talent working with your product and marketing teams to get products to market faster? In the past, it was acceptable if innovations and the subsequent value associated were delivered in two to three years. Now firms need to be able to deliver value almost immediately, whether it is via an acquisition, new product launch or large transformation initiative. Delivering frequent incremental value will be core to any strategy.
Key Takeaways
Iconic Silicon Valley players mastered the digital playbook, and it’s time for the buy side to borrow a page in order to write its own story about the “art of the possible”.
With technology, there’s always excitement about the “shiny objects” on the horizon, such as analytical tools that can extract insights from both structured and unstructured data. But before you can fully take advantage of those powerful innovations, you need to get your overall data management architecture right. A firm’s data foundation is critical to facilitating data-powered business use cases and realizing tangible business value.
Key Takeaways
For asset management firms, the ability to use emerging technologies like AI, advanced analytics and machine learning at scale—along with harnessing new sources of data—is key to driving innovation, growth and increased efficiency.
The power of analytics and AI
Source: Accenture Global Data and Analytics/Artificial Intelligence Study 2020
Asset management executives are under pressure to accelerate the pace of change within the business while also infusing a change mindset into all aspects of their culture, including both technology and the business. This mindset goes beyond program delivery and into areas such as how people are hired, trained and rewarded, and how they collaborate with vendors and partners.
Key Takeaways
Continuous change is not going away; it is our new normal. In light of that, asset managers should:
2020 has been challenging in many ways. The recent development of COVID-19 vaccines offers hope that organizations—especially the workforce and workplace—could return to a semblance of pre-pandemic normalcy. Yet 2021 is still likely to bring some rough patches. Given this uncertainty, it is vital that asset managers build into their companies the competitive agility required to pivot quickly in response to marketplace events. Sophisticated analytics technologies will be essential to developing an asset manager’s predictive capabilities—anticipating the impact of business and technology developments and helping to steer the business toward sustainable growth.