The Wealth and Asset Management industry in a changed world
Posted by Luuk Jacobs on 21 August 2020
“Never let a good crisis go to waste” said Winston Churchill, and here we are.
The Covid-19 crisis has dominated 2020 and also made us reflect on how we operate in the Wealth and Asset Management industry.
As restrictions lift, of course the Wealth and Asset Management industry is able to restart, and it definitely won’t be from a complete blank canvas. However, thinking from that perspective could be a positive starting point.
Imagine if we permitted ourselves the freedom to create scenarios while not immediately dismissing them for reasons of perceived impossibility, culture, legacy systems to name a few. It is not beyond the realms of possibility for us to redefine the Wealth and Asset Management’s industry for decades to come.
So, if we would have a blank canvas what picture would we paint?
With employees starting to return to the office with the majority having been used to work from home for the last five months, possibly the canvas should start painting the new working environment of employees. Both companies as well as employees have experienced the benefits and draw backs of it. The thought of not being together with colleagues and only connecting via zoom would over time reduce significantly the benefits of the human interaction in an office. 3D (hologram) technologies could in the near future emulate the working in an office; A Headset to meet in an artificial coffee corner of the office, look at files with your colleague, having a virtual desktop (so no need for space to place hardware), yes even create a post-it wall.
Is this too futuristic? The technologies already exist (Microsoft, Kazendi, others) and the current Covid-19 environment could just propel them into our daily lives. The virtual office is not yet a full mimic of the office environment, but it certainly could (partly) compensate for those day’s employees are working from home and create the opportunity to work from home and still be virtually in the “office” enabling real time interaction and collaboration with colleagues.
Before we get there however, we need to ensure that a work environment is created in which coordination, cooperation and effective working is ensured in an environment with social distancing, working from home, etc. Management styles will need to be adjusted and augmented and interaction with and between colleagues in which each participant has its responsibility. Training and coaching needs to be at the heart of it to make it work long term.
It is however not just the employee engagement that has changed significantly. Equally customers (institutional as well as retail) have embraced a more technological driven communication and digital meetings have often led to more meaningful client interactions. The need for facetime (and associated travel) has significantly been reduced. Could 3D technology also be introduced in the communication with clients and support a more individual engagement with clients, could an investment experience be created with the 3D technology; bringing a current paper-based product communication more interactive and beyond an advertising video. Webinars would continue to be used to communicate with potential end existing customers alike creating further engagement and likely longevity with them. Smart phones, tablets and other devices would be used to communicate with and update the client of the investment portfolio and imaging would be used to show the path taken and achievements realised along the way.
Tapping into big data
An industry still focussed on the need to invest through a selection of funds would, with the enhanced use of data, better understand the broader and over the life changing financial needs of its customer. Lifetime solutions and outcomes would be offered, potentially even multi-generational instead of capital being generated over a lifetime, consumed during retirement the remaining part transferred to a next generation at dead. Could it be used better, and more tax efficient during life with for example grandparents freeing capital to support the education of their younger generation; could asset liability management be defined beyond retirement cover.
Big data, new data generated by the Internet, smartphones, satellites and other innovations, could be the source to achieve most of the above. These big data are already translated into valuable information, providing the (investment) analytics and insights, achieved through technologies like natural language processing, image recognition and machine learning. Currently mainly being used to optimise the investment decision process, they would also be used also in the product design and distribution process
Picturing the combination of big data from a company with multiple external and client sources (for example social media, insurance and financial intermediary companies), using the latest analytical technology and creating a culture of collaboration within the company, it would create the needed up to date and regularly revised information for designing the investment products of the future, delivering the envisaged bespoke outcomes of an investor: Artificial Intelligence deriving insights by simulating aspects of human intelligence and analysing vast amount of data.
An Asset and Wealth manager will also be ensuring outcomes are delivered within the right framework of Economic and Social Governance (ESG). Not just within the investment decision process but equally within its own organisation. Its employees will be a reflection of the diversity of the society we live in and operating within an environment of collaboration with pay gaps or any other inequality being a thing of the past. The new technology will be used to its full potential to drive human-centred transformation and innovation at scale.
Such a canvas can only be filled if it is supported by a target operating model that has a pallet to take these changes into account (being agile and innovative) and continues to operate within an ever-changing regulatory environment. Technology like blockchain, machine learning, artificial/augmented intelligence, robotics will be widespread implemented and supporting a further alignment between investment, KYC, AML, client communication and governance processes. Those processes that have little or no added value will be made redundant by it. Overall IT security, more specific cyber security and privacy (data) protection, will have been lifted to the highest standards to ensure continued trusted relationships.
Covid-19 needs to be more than a clean-up of the colours of the painting and putting a new frame around the canvas. The Wealth and Asset Management industry should follow in the footsteps of Picasso. His Las Meninas series of 58 paintings were created by intense analysis and reinterpretation of 400-year-old Las Meninas by Diego Velázquez.
Should we analyse and reconfigure the Wealth and Asset management industry in 58 ways, we would see innovation and improvements for decades to come.
Posted by Luuk Jacobs on 17 September 2020Read post