Early adopters of digital tools in asset and wealth management already report a competitive advantage and gains in improved customer experience, a survey found.
The use of digital by firms also reduced their operating costs, increased efficiencies and improved regulatory compliance, the firms said.
Growing cost pressures are partly behind the rise in digitalization, along with the importance of fees and charges as differentiators between firms.
Examples of digital development found in the Dassault Systèmes survey included portfolio managers who were using Twitter to construct ‘mood’ indices as markets become more efficient, and product developers could also use all social media platforms to tap into investor thinking via informal focus groups.
However, there was also widespread recognition that social media carried the risk of conveying “alternative facts” with a high noise component.
In all, some 80% of asset managers and 77% of wealth managers expected digitization to partially or fully disrupt their industry within a decade though the majority of respondents forecasted a competitive landscape of alliances with external disruptors, or the development of proprietary platforms.
Only a minority expected external disruptors to carve out niches.
The survey found that 54% of asset managers had adopted social media tools, while 56% of wealth managers had adopted new digital platforms.
Blockchain was the least implemented and used by only 6%, most of whom were subsidiaries of large banks that were part of consortiums developing the new generation of blockchain.
Dassault Systèmes commissioned Create-Research to survey over 450 senior executives in asset and wealth management on digital transformation.
“The key driver of digitization in the years to come will be changing client behaviors, under which financial services will evolve from being supply-led to demand-led,” said Amin Rajan, CEO of Create-Research.
“This means that wealth management is at the dawn of a new transformation, more far reaching than anything experienced before.”
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