Embracing technological advancements has created unprecedented growth and efficiency for many firms, yet challenges persist, especially for industries like asset management. I spent almost 20 years at Mercer researching asset managers who all talked the talk about their focus and investment in data and technology to give them an edge but few delivered. In particular, sales, marketing, and customer relationship processes at asset managers lag that of other industries who have incorporated, and improved on, their data-driven distribution models. For example, 79% of marketing leads don't make it to the sales team — imagine we could solve for this and evidence the sales conversion rate. There is a huge opportunity for data and technology to do for asset management what Xero did for bookkeeping and accounting.
The Challenges
Fragmented Data Ecosystems
I was always surprised that whilst many asset managers talked a good game around the importance of data and technology, few practiced what they preached. This was clear with a few simple questions asking for examples of insights gleaned from datasets, how the insights were being used or what the process was to convert data to information to insights to action. As the world of asset management becomes more digital, firms are inundated with data from various sources. This data, though invaluable, often exists in silos — databases, CRMs, finance systems, marketing platforms, registries, to name a few. Bringing this data together, ensuring its consistency, and gleaning actionable insights from it is a challenge many asset managers grapple with.
Ineffective Investment
The surge in investment towards technology and data infrastructure, aimed at harnessing data insights, often fails to meet expectations. Companies pour significant resources into advanced technologies and platforms, anticipating improvements in efficiency, customer experience, and innovation. However, many of these investments fall short, as promised comprehensive solutions by vendors fail to deliver, usually due to a lack of support from the right business stakeholders, leading to squandered resources and missed growth opportunities. This issue highlights the importance of strategic planning and due diligence in tech investments. The challenge lies not only in the complexity of integrating new systems but also in navigating overhyped promises. To avoid such pitfalls, a critical and analytical approach in selecting technology that aligns with business needs and delivers real value is crucial.
Lack of Fit-for-Purpose Solutions
The asset management industry faces a significant challenge due to the lack of fit-for-purpose solutions. Many available platforms are not designed specifically for asset management, requiring extensive customisation to meet the sector's needs. This process often involves hiring external CRM experts, which not only increases costs but also diverts internal resources from their primary tasks. Customising generic platforms to align with the unique requirements of asset management is both expensive — requiring internal resources like a CRM expert or team of experts, or external support (many hire Salesforce consultants) — and time-consuming, with transformation programs sometimes taking more than a year to implement. The need for tailored software solutions in the asset management industry is clear, as the current approach leads to unnecessary expenses and operational inefficiencies.
The Need for Real-time Insights
In today's fast-paced financial markets, the ability to adapt quickly is crucial for asset managers to stay ahead of the competition. Market dynamics shift rapidly, driven by global events, technological advances, macroeconomic shifts and changes in investor sentiment. We need tools that provide real-time insights, enabling managers to make informed decisions swiftly. Traditional methods, reliant on manual data analysis, struggle to keep pace with these changes, often resulting in delayed responses and missed opportunities. Modern asset management requires the integration of sophisticated, technology-driven tools that can process vast amounts of data and deliver actionable intelligence instantly. Those who can leverage these advanced capabilities will navigate the market's complexities more effectively.
Evolving Client Expectations
As digital technologies become ubiquitous across sectors, clients increasingly demand seamless and personalised experiences that are data-driven. This shift necessitates organisations to not just gather data but to transform it into actionable insights for enhancing customer interactions. The challenge lies in locating, accessing and then analysing customer data to predict needs and tailor services, leveraging advanced analytics and AI. Moreover, this shift towards data-driven client experiences requires organisations to adopt an evidence-based approach, ensuring decisions are informed by data.
Why Solutions are Imperative
Future-Proofing with AI
The use of advanced technologies, from AI to serverless computing, isn't just a trend or fad — it's the future. Many firms are now able to cut administration costs significantly using AI or increase sales activity from AI-driven marketing leads. A simple example is where the AI will inform the salesperson who to speak to, when to speak to them and what to discuss to maximise the chance of making the sale. Firms that fail to adopt and adapt risk becoming obsolete.
Operational Excellence
Consolidating data and automating insights can significantly reduce operational inefficiencies, leading to cost savings, improved risk management (and regulatory reporting) and better resource allocation.
Enhanced Decision-Making
Access to cohesive, real-time data can significantly enhance decision-making capabilities, ensuring firms stay agile and responsive. Importantly, the decisions can be measured, providing accountability. As the firm learns from the insights, the models can adapt creating a virtuous cycle of improvements.
Client Retention and Acquisition
In a competitive landscape, offering clients data-driven insights and experiences can be a significant differentiator, aiding both retention and new client acquisition.
Our Journey at Datafabric
While challenges loom large, innovative fintech solutions are emerging to bridge these gaps. Platforms like Datafabric's "Compass" consolidate diverse data sources into a "single source of truth," addressing fragmentation. Real-time, AI-driven insights empower asset managers to make quicker, more informed decisions. With experience in both data analytics and leading distribution functions at asset managers, the two founders of Datafabric are well versed in the challenges asset managers face and the potential solutions. This led to Datafabric being established to help asset managers realise their potential by using data-driven insights in their sales, marketing and business management processes.
The Early Market Success
Market-testing provided validation to the idea that most asset managers struggle to consolidate data and use it in a way that helps them be more effective at sales and marketing, using insights derived from the data. Once they could see the benefits and how different stakeholders could all build different workflows — from the same single, central data lake — to align their objectives to the business objectives, there was typically a real "eureka" moment.
These stakeholders include sales teams, marketing teams, product teams, customer service teams, consultant relationship teams, boards, executives, and more. Being able to use the data and AI integrations to improve outcomes was one thing but what was important was to measure the success of the solutions put in place through better data to track against KPIs and hold everyone accountable for their roles.
The Business Impact
The solutions focus on:
- Improved sales and marketing outcomes and customer relationships
- Improved reporting to various stakeholders on distribution activity (Board, portfolio management teams, etc.)
- Helped the various stakeholder teams focus on activity that would add value, where the value add could be easily measured, tracked and ultimately processes improved
- Helped make the teams accountable to their KPIs with real data and show Sales and Marketing ROI
Conclusion
The asset management industry stands at a digital crossroads. By acknowledging challenges and adopting tailored, innovative solutions and AI, asset management firms can not only navigate this new frontier but thrive within it. Asset management is ready for its transformation moment. Join us in reshaping the future of asset management through the power of data and AI.