• 79% of global asset managers surveyed consider digital a top or high priority area
• Firms seen significant increases in digital channel traffic since the onset of Covid-19
• Over half (55%) expect their digital budgets to increase next year
• Almost two thirds (60%) of managers have already mobilised their digital transformation efforts
• Over half (58%) still dedicate less than 5% of their operating expenses to digital

14 July 2020 – The global Coronavirus pandemic is forcing Asset Managers to prioritise their digital initiatives according to the latest Digital Readiness Survey from Alpha FMC, the asset and wealth management consultancy.

The study incorporating a survey of 40 of the largest global asset management firms, collectively managing over £17 trillion in AUM and operating across markets in UK, EMEA, APAC and the US, finds that firms are now acutely aware that they must swiftly accelerate their digitisation agendas in order to remain competitive in the post-Covid world. An overwhelming majority (79%) of the global asset managers surveyed now consider digital a top or high priority area and over half (55%) predict that their firms’ digital spend will increase over the next year.

Alpha’s research further reveals that asset managers are taking proactive steps to kickstart their digitisation journeys, as almost two thirds (60%) of firms have already mobilised some form of digital transformation effort across their business. Over half of firms (51%) say that their number one digital priority is to improve client experience, satisfaction and engagement, followed closely by the pursuit of scale and cost efficiencies.

The Coronavirus pandemic has already put pressure on managers’ digital capabilities and sparked an increase in traffic to existing digital channels at global firms. Many are aiming to capitalise on this uptick and have invested heavily in sales enablement activity, such as content, lead management and automated marketing programmes as a result. In fact, sales enablement activity is the second ranked area of digital spend for asset managers and the top priority digital spend for institutional firms.

Despite improvements, the Coronavirus pandemic has effectively stress tested the digital estate of many firms, highlighting to some that they might not be as far along their transformation journey as they previously thought. As such, we have seen the majority (68%) of firms now describe themselves as ‘getting organised’ on digitisation – a substantial 20% increase on 2019. Asset managers are also making the most of the expertise on offer from the thriving Fintech sector, as over two thirds (60%) of the major firms surveyed say that they have partnered with a Fintech in order to accelerate their digitisation process.

Still a long way to go

As managers take stock of Covid-19, less than one quarter (23%) think that their existing digital capabilities meet client expectations and the majority (75%) of respondents say that less than 5% of their workforce occupy roles that focus on the growth of digital.

Alpha’s research indicates that there may be tension among asset managers around who actually ‘owns’ the digital agenda, which typically sits across Marketing and Distribution practices. Only 12% of the large global firms surveyed have established a separate digital function with a Chief Digital Officer or specific digital lead. The lack of genuine digital buy-in is also reflected in budgets, as over half (58%) of firms dedicate less than 5% of their operating expenses to digital transformation.

What is driving digitisation?

Increased client expectation remains the key driver of digitisation across the asset management industry and the impact of Covid-19 is thought to have exacerbated existing demand as firms report widespread adoption of their digital channels.

Client expectation is closely followed by the need to ‘scale’, bring in new technologies, reduce costs, and keep pace with competition from incumbents and new entrants – all of which are thought to benefit from the roll out of company-wide digital strategies.

Obstacles to digital maturity

While the pandemic has put digitisation at the top of the agenda for many asset management firms, a whole host of legacy obstacles is preventing widespread digital adoption. According to Alpha’s research, the top three obstacles to good digital delivery in 2020 are a lack of investment, organisational set-ups that are digitally incompatible and a need for cultural change across businesses. The findings demonstrate a stark change in landscape since 2019, when underinvestment was not necessarily considered an obstacle. Previously, lack of buy in from senior leadership proved one of the major barriers to digital change, however this year’s findings indicate that the industry’s key decision makers now recognise the benefits that company-wide digitisation can bring.

Commenting on the findings, Kevin O’Shaughnessy, Head of Digital and Agile Transformation at Alpha FMC, said: 

“Every sector worldwide is grappling with the significant implications caused by the Covid-19 pandemic and the asset management industry is no different. The way in which our industry operates is going through a fundamental change and firms are taking stock of how best to innovate in line with these global foundational shifts.

“While Coronavirus appears to have shocked many firms into taking their digital transitions more seriously, there is still much work to be done across the sector in order to meet increasing client demands. Our findings indicate that the importance of digitisation has moved across many aspects of an asset managers business and is now equally relevant across all segments including institutional investors. Asset managers see that their clients have become accustomed to slick digital offerings in lockdown and want to see them rolled out further.

“This pandemic has posed a whole host of new problems to the financial services sector, but with these changes come a range of opportunities. To make the most of this newfound demand for digital, firms who have long ignored requests  for increased budgets from their CTOs and digital leads should take advantage of increased buy-in from senior leadership in order to instigate widespread cultural change across their organisations.”