Concluding thoughts

Distributed ledger technology and artificial intelligence continue to be the technology areas that survey respondents believe will have most impact on the future of the asset management industry. AI is finding application in a wider range of service areas, including robo-advisory and in investment research. Its use is also growing, particularly in client service and in customer analysis.

In the client service area, asset management and asset servicing companies are utilising natural language processing to improve automation rates in query handling and processing email communication – often utilising AI to support a triage process, whereby some low-complexity tasks may be automated and higher-complexity tasks are passed to the relevant person in the client service team.

Some firms are also utilising cluster analysis and client segmentation techniques to identify commonalities between investor groups that may be targeted for specific types of investment solution. Beyond this, respondents said they are applying AI in investment research, in analysing legal contracts and to extend automation in request for proposal (RFP) handling. “We are applying AI to replace the majority of our RFP staff,” said one respondent (fig 17).

The potential benefits of distributed ledger technology were outlined in some detail in last year’s Asia-Pacific and Europe-UK reports – and these benefits endure. The industry has more live use-cases against which it can benchmark the performance of DLT technology – and it is becoming more discerning about when it should apply DLT. There was a time when DLT was seemingly advanced as a solution to all the industry’s risks and inefficiencies. This is a weak starting point for effective implementation. Now the industry is getting a better understanding of what this technology does well – and where, in some cases, alternative options may be better suited.

For many respondents, the ability to process large data sets, to work with high data velocity and with a wide variety of data types and formats, underpins much of the innovation highlighted in this report. It is no surprise, therefore, that respondents are identifying “big data” in their investment priorities – to fuel front-office research, to support CRM systems, to drive AI applications and for a wide range of other uses.

The primary challenge that asset management companies face in attracting new investors lies in lack of investor education, along with lack of trust from investors in the product options currently offered by fund promoters. Almost half of survey respondents also identified a high cost of investing as a significant barrier to attracting new investment.

In addressing these concerns, asset managers are likely to extend the range of ETFs and low-cost products extended to investors. The asset management sector will also be subject to greater specialisation, with fund managers narrowing their product lists and channelling product innovation into areas of specialist expertise and high demand from investors.

From a geographical perspective, survey respondents expected the strongest opportunities for business growth and asset gathering to come from within Europe. European respondents (ex UK) are looking to prioritise growth opportunities within the EU, with the UK and Asia-Pacific also offering the potential to build assets under management.

Perhaps unsurprisingly, UK-based respondents are looking first and foremost within the UK funds market to deliver asset growth in the near term, but with an eye on EU and Asia-Pacific markets as they seek business growth in a post-Brexit trade and investment landscape.

© 2020 funds europe

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