Investing in the future themes resonate with clients

Themes that resonate with clients

A look at the consistent themes clients raised when discussing investing in the future.

Partner, Financial Services Strategy Group, Transactions & Restructuring

KPMG in the UK

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Waves hitting the shore

 

Morning editions of the financial press might make you wonder if you’ve awoken in 2015 or 2030. With increasing frequency, we see headlines such as “Alibaba becomes major money market fund seller in China” or “Disillusioned with fees, retail investors embrace low cost robo advisors.”

Such news bullets are prompting investment managers to recognize that the stability of the sector, a seemingly given for so long, is being replaced by a cresting wave of disruptive forces which are rapidly changing the landscape. Many are finally taking action.

 

Investing in the Future megatrends now evident

In June last year, we published Investing in the future, which looked at the powerful megatrends which we expect to reshape the industry over the next 15 years and are already clearly evident: changing demographics, technology advancements, changes in social values and behaviors and the environment. We believe these forces at play will require many players to radically reshape current business and operating models, transform client strategies and embrace new technologies to remain relevant and deliver sustainable and profitable growth.

Since launching the report, we have had a huge number of discussions with clients across all of our global markets to gauge their reaction to the Investing in the future report. There has been overwhelming consistency in the themes which have emerged. First, they widely agree with the depiction of the megatrends and their likely impact. Second, and more importantly, these clients are already witnessing tangible evidence of the impacts and predicted industry shifts.

While ominous press headlines are one indication of the tide of change, these business leaders report that they see the arrival of sophisticated new entrants with more relevant and engaging propositions and service models in their own markets. In some cases they are seeing concrete moves by innovative digital providers to woo their price-sensitive, tech-loving clients. Or, they see a frenzy of alliances forming between traditional investment firms and agile fintech companies, setting the stage for joint ventures and imminent first-to-market innovation.

While these events confirm the themes discussed in Investing in the future, what is perhaps more remarkable is the speed at which the megatrends are coming to fruition. While our report’s predictions were projected over a 15-year time frame, clients state that they are seeing the impact of these industry themes build increasing momentum over the last year.

Taking action to respond

With a heightened awareness of the industry shifts, investment managers are either considering, or in the midst of, refining their core organizational capabilities, including proposition design, significant investments to replace and enhance technology platforms and add digital and multi-channel services.

Underpinning these moves are a number of concurrent initiatives:

  • Gaining a much deeper understanding of current and future clients needs, requirements and expectations by testing and applying data and analytics.
  • Developing more sophisticated client segmentation, with the aid of predictive analytics, to shift from the backward looking, static and one dimensional approach to a forward looking, multi-dimensional behavioral model to help better design best-fit service models, pricing and channel options.
  • Introduce digitalization, both in terms of client-facing interfaces that play to client demands and preferences and middle and back office digital innovation to enhance productivity and safety.
  • Embed deep operational efficiency, by replacing antiquated systems and streamlining cumbersome processes to create a sustainable, low cost advantage, increase visibility of financial and regulatory risks and enhance management decision-making.

Some of the issues to be covered

In light of the appetite to keep abreast of these developments and relevant best practices, we are launching our Investing in the future article series: the Investing in the Future Bulletin. These articles will focus on the issues above and also a range of other strategic challenges that our Investment Management clients face as they embark on transformational initiatives and respond to the industry megatrends. For example:

  • How can Investment Managers resolve the potential conflict between low-cost delivery and client-centricity?
  • Is it possible for a firm to harmoniously integrate its established advisor forces into a multi-channel universe?
  • How can an organization ensure that its current technology initiatives are on track to deliver the desired return on investment?
  • Is it possible to balance business sustainability for both society and shareholders?

By exploring these and a range of other timely issues, we’ll make meaning of the morning headlines and events you see in your marketplace, to help chart you a sound strategy for 2015 and 2030.

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