Radical new operating models can help investment management companies grow margins and remain compliant, while keeping regulators happy.
With margins threatened by regulatory demands, pressure on fees and increased competition, a 2013 poll forecasts that 20-30 percent of today’s asset management industry will disappear within the next decade.
Most current operating models are outdated and unwieldy, with disparate information technology (IT) systems, and lack the agility to deliver innovation and support compliance efforts.
A standardized, automated operating model provides a foundation for scaling up internally and integrating with joint ventures or consortia.
Despite having more data than ever, many asset management firms cannot fully utilize this information. The right insights can help to uncover new market opportunities, identify gaps in the portfolio or determine when to exit underperforming products.
Client details are frequently held in different formats, preventing a complete view of a customer. To make the most of analytic tools, raw data must be filtered, organized and stored efficiently, and be easily accessible.
A data “csar” working across business units and liaising with the IT function and data vendors can re-architect data using common definitions, and provide information in real-time. The comprehensive management information framework should cater to a variety of different needs from self-service tools available for quick insights, regular reporting by data analysts and at the technical end, speculative investigative research for specialists.
The path to analytic maturity begins with centralized, standardized data storage and reporting, to process and harmonize internal data with that of third parties. Investment management companies then have a foundation for advanced analysis to compare different products, people and customers.
Geographic, demographic or financial segmentation helps sales and marketing teams tailor products and services towards defined groups. Moving up the maturity curve, predictive modeling assesses the impact of new competitors, economic volatility, talent scarcity, falling prices, and regulatory change. At the highest analytic maturity level, companies can access data quickly, in the right format, to spot new opportunities and protect against adverse events.
Rather than hand senior managers huge spreadsheets with thousands of pieces of data, reporting should incorporate visually compelling presentations that explain profit performance and customer purchasing behavior, and enable competitor comparisons.
A host of opportunities beckon, such as alternative investments, retirement plans, wealth management, and developing markets in Asia and Latin America. A flexible operating model, supported by robust data, can give investment management firms the agility to seize these openings, while coping with new regulations and increased investor demands for due diligence and reporting.