Asset managers are set to benefit from big data and advances in technology. Initially, individual asset managers will use the latest developments to increase alpha generation. Later, as new technology becomes more established, all asset managers will need to harness big data, artificial intelligence and other developments in order to remain competitive. That means the creation of digital platforms to strengthen customer relationships. Robo advisors are likely to be a growing feature, and technology will help to create innovative investment products. Regulatory changes could increase compliance costs, or reduce management fees, while startups may steal market share from incumbents.
Company specific thoughts:
Some asset managers are adopting distribution-related technology platforms. This is an interesting development that includes robo advisory platforms and is probably driven by the need for asset managers to offer investment products to independent advisors. An example is Invesco’s recent acquisition of Intelliflo, which provides a platform that is used by 30% of UK financial advisors for financial planning, CRM, and other functions. In future, Invesco should be able to include more of its investment funds/products in the platform’s construction module, which is similar to Jemstep, a previous Invesco acquisition. Jemstep was one of the first online automated investment platforms in the financial services industry.
Financials: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.