Until recently asset and wealth management (AWM) has been limited in reach by high costs and low data transparency. According to our study "Rewiring asset and wealth management", digitalization will increase the impact of AWM significantly. Innovations such as analytical tools, smartphone applications and algorithm-based portfolio management software support the tasks of asset managers and simplify the access of their services for customers – including reduced costs and availability around the clock. The annual growth rate in traditional AWM is estimated to reach 6% in 2022. With the integration of analytical tools the annual growth rate is expected to be significantly higher, hitting levels of up to 40% over the same period.
To achieve higher growth rates we recommend a process in four steps. It starts with the identification of the individual target position on the AWM value chain. Large companies might introduce software platforms. Smaller enterprises could provide a unique experience across the value chain or focus on a particular area. The process continues with the understanding, which actions might prove as relevant enablers. For this analysis asset managers should offer an online approach, keep the paperwork for clients to a minimum and thereby reduce the work-time from 10 hours to 15-30 minutes. Additionally, web tools could improve marketing activities and customer acquisition. In a third step, digital activities that could lead to extra value must be identified. Here a "digital heat map" with four quadrants illustrates the whole range of different activities. The process ends with rethinking the value chain including analog and digital steps. Tasks like investment proposal requests, account opening or reporting could easily be digitalized. However, the customer value client relationship management should stay on a personal level.
Several big AWM players have recently acquired or are working together with Fintechs . That gives them access to new ideas and innovations as well as opportunities for own experiments with limited risks. To make the most of these experiences asset managers should cultivate a mindset including a trial-and-error approach, prototyping techniques and design thinking.
Digitalization drives innovation in asset and wealth management. This study presents four steps to rethink the value chain for decisive market growth in the upcoming years.
