The inevitable digitization of portfolio management companies (SGP) – EconomieMatin

The rise of digital technology and new digital tools is having a profound impact on the asset management professions, including portfolio management companies. New opportunities are emerging thanks to the contributions of artificial intelligence which allow better customer knowledge.

The use of digital tools tends to become widespread in all business sectors, particularly in finance. In an industry where regulatory constraints are growing and customer knowledge essential to offer vehicles adapted to the risk profile and expectations, digital tools have become essential.

The trend has even increased in recent months following the health crisis. Lockdowns have forced portfolio management companies to review their customer approach by accelerating their digital transformation. At the same time, the emergence of investment platforms on alternative assets such as cryptocurrencies offers accessibility and simplicity in the subscription process, which are attracting more and more young investors. Faced with new fintech players, it is necessary for portfolio management companies to adapt.

New perspectives for management companies

Digital technological tools such as big data, maching learning, robot advisors or blockchain are all new opportunities. Their use fits perfectly into the needs of knowledge, collection and analysis of customer data and the security of this data and transactions.

Mastering and understanding the expectations of savers in their investment choices, where products with an ESG (environmental, social and good governance) character are becoming increasingly important, is a necessity. The contributions of big data analysis capabilities thanks to artificial intelligence meet this need by directing savers towards investment vehicles that give meaning to their investments.

In an inflationary context and feverishness on the financial markets, savers are looking for high-performance products that are resistant to the vagaries of the markets and have an impact. Thus, more and more of them are turning to alternative financing, particularly in the unlisted. Real estate on the one hand, but also private equity funds are popular with this connected clientele.

An appropriation of the digitalization tools in the making

Acquiring customers through digital channels is disrupting the traditional marketing channels of portfolio management companies. Although aware of the challenges of digital, asset management professionals are still struggling to master these tools. According to the AFG, only 12% to 33% of financiers use big data in their marketing process.

Change management is not immediate. It requires the mobilization of financial resources but also the employees of the management company. Embarking teams on the digital project requires long-term support and training in new tools. The lack of time of employees often proves to be an obstacle to digital transformation.

But time is running out. From August 2 this year, financial advisors will be required to take into account clients’ ESG preferences in their investment choices in order to direct them to the right vehicles. In this, the use of robot-advisors can be very effective as an assistant in understanding the sensitivity of savers. Finally, the automation of subscription processes with the dematerialization of documents, the implementation of electronic signatures, the fluidification of KYC management are all elements that improve the customer experience while limiting the time administrative management of financial advisers. Thus, according to a McKinsey study, digital tools generate 18% to 30% additional operating income thanks to better customer knowledge and a tailor-made product offer.

Nevertheless, digital will not replace the financial advisor. The physical relationship remains a determining element of trust between the advisor and his client. When it comes to finding the answers to questions or planning life’s greatest moments, clients show a greater interest in maintaining personalized and authentic interactions with a real advisor.

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The inevitable digitization of portfolio management companies (SGP) – EconomieMatin


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