How the UK asset and wealth management sector can create sustainable change and help shape the future

Moving into the digital age

As remote operations and digital engagement become increasingly commonplace, being able to offer a seamless and intuitive digital experience is essential.

Investing in technology and improving digital capability to keep up with customer expectations and new ways of working is critical for the future of the AWM sector.

Our 24th Annual CEO Survey shows that 64% of global AWM organisations are concerned about changing customer behaviours. This will take on increasing importance as wealth shifts through from baby boomers to their millennial children. The next generation expects a different relationship – typically a more active, personalised and digitally-enabled one – than their parents. Unsurprisingly, CRM, on-boarding, digital signatures, workflow and remote communication have all become top of the agenda.

Organisations leading the way are harnessing artificial intelligence, data analytics and agile cloud capabilities to get closer to customers, target emerging investment opportunities, develop bespoke offerings and better understand their portfolio exposures. They’re also upskilling their workforce and prioritising talent development to ensure they can make the most of new technology and digital tools.

Securing operational resilience

By creating secure, digitally-enabled operations, AWM organisations can meet growing demand for speed and flexibility. This will also better equip them to steer through future disruption and enable them to capitalise on new opportunities, while retaining the trust of customers and regulators.

We know digital transformation that breaks internal data silos and improves data analysis is a high priority for asset and wealth managers. In our CEO survey, 84% of AWM CEOs told us they were planning to increase investment in digital transformation over the next three years. This is coupled with a greater focus on cyber security, with 75% increasing their spend in this area to ensure they mitigate the growing risk of cyber threats. The greater shift to remote working and hybrid working models makes this all the more important.

Improved security also enables organisations to take calculated risks and innovate with confidence. For example, blockchain has the potential to make transactions more efficient, removing the need for custodians and administrators to validate different steps of the process. Our analysis shows this has the potential to add $16.3bn to the UK economy through improvements in securitisation and payments. If AWM organisations are to take a lead in this space, they need to have first transformed their internal processes and capabilities through the right long-term investment in technology and cyber security.

Boosting capability through collaboration

Regulatory requirements coupled with issues around scale and trust mean we’re unlikely to see a major new disruptor appear in the AWM sector. However, there is opportunity for smaller players to enter specific parts of the value chain, such as data management, reporting, developing customer interfaces and other specialised areas. 

Working in collaboration with such companies opens up new opportunities for traditional AWM businesses to increase agility and build new capabilities while driving down costs.

In an interview for our 24th Annual CEO Survey, Katherine Garrett-Cox CBE, CEO of GIB Asset Management, told us she expects to see businesses becoming more specialised. "Gone are the days when everyone did everything," she said. "Certainly we are thinking a lot more about who we can partner with to build a successful boutique asset management firm, rather than necessarily doing everything in-house."

Driving positive change with ESG

Society’s growing focus on environment, societal and governance (ESG) issues means that customers are increasingly asking more questions about where and how their money is invested. Soon they will determine what kind of businesses and business models they want to support.

Asset and wealth managers need to recognise the power they have to drive meaningful change by making ESG criteria central to their investment decisions and allocating capital to areas of the economy where it will make the biggest difference.

Embracing ESG is crucial in keeping pace with customer and investor demands, while also allowing organisations to capitalise on fast growth markets such as green bonds and ESG-orientated investing. As wealth transfers to a new generation, it will be crucial to develop products and services that align with their values and priorities, whether it’s climate change, poverty alleviation or other social concerns. This must be supported with open and transparent reporting. AWM organisations that meet these emerging needs will have an advantage in securing and sustaining mandates.

The sector is already responding – more than two-thirds (68%) of global AWM CEOs are planning to increase their investment in sustainability and ESG initiatives over the next three years. A growing number of institutional investors are planning to move away from non-ESG products altogether.

Shaping the future

The AWM sector has a real opportunity to redefine its role and purpose in the world. While it must take steps that protect customers, meet broader responsibilities and remain compliant with regulation, it must also recognise that it has the power to drive meaningful change that can make a difference. 

By modernising operations, fostering closer digitally-enabled customer relationships and developing purpose-driven strategies with the power to shape the future, AWM organisations can play a vital role in driving the UK’s green recovery and help address some of the biggest problems facing the world.