The asset management industry is recognising the importance of digitalisation in regards to their processes (Big Data) and sales (Social Media) but tackles the topic unsystematically. Results of a study pursued by Endava and Kommalpha.
The financial industry has lost consumer’s trust during the finical crisis and has only slowly recovery it since then. In this new environment, new competitors form automated asset managers to social trading platforms have entered the market. Those new competitors are a thread to traditional asset management practices says the study “ASSET MANAGEMENT 2.0 - Wie verändert sich die Branche durch neue Technologien und/oder neue Anbieter („FinTech-Unternehmen“)?“, which was recently published by the consultancies Endava and Kommalpha. To remain competitive, asset managers should also consider digitalisation, which until now is only done unsystematically. While big data is not important for their daily operation, social media has become important to some industry incumbents.
Usage of big data
56 percent of asset managers are using big data regularly or at least irregularly. 30 percent state, that they do not want to use big data and 14 percent are yet undecided. Big data is used by asset managers for market research and for pursuing analyses. Further usages are reporting, the generation of knowledge and evaluating benchmarks. Only 22 percent of asset managers use big data for investment decisions.
The study identifies three categories of asset managers regarding their expectations towards big and smart data: Some asset managers have high expectations and hope for a series of efficiency improvements. Asset managers with some optimism have concerns about an increasing competitive pressure and expect a difficult implementation. Finally, some asset managers expect no influence on their business model and operations. Most asset managers find themselves in the first group and justify their optimism with approaching customer more targeted, improving analyses, fewer errors and mistakes as well as improved information.
Usage of social media
In contrast to big data, social media is used in the daily business of asset managers. 27 percent use it regularly, and 43 percent irregularly. Social media is used to develop one’s network (64%), contacting investors (53%), general sales (67%) and reaching new customer segments (39%). Most importantly, it is used for generating a positive company image (70%). As for big data, an increasing usage of social media is expected by asset managers.
Despite the higher usage rate and the opportunities of social media, it is used generally unsystematically. In only few cases, social media usage during working hours is wished and new channels are empowered by top management in rare cases only, says the study.
Asset managers are using social media for approaching customers more efficiently, especially younger ones. Some do even see further advantages as an automation of investment decisions or “soft factors” such as improved recruiting. Asset managers, that are more neutral regarding social media, say that their success is dependent on investors and claim for a separation of more professional platforms and broad “fun platforms”. Some are seeing no effect on their business and argue that important contact are generated elsewhere and they play a minor role for institutional investors.