New research commissioned by digital transformation and marketing agency Paragon DCX has revealed that the asset and wealth management sector is struggling to prioritise digital transformation.
The report reveals that financial performance is still seen as the main differentiator in the market. Creating a seamless digital experience for clients and customers is purely viewed as a hygiene exercise, unlikely to deliver transformative commercial gains.
This finding is in stark contrast to other industries, where digital transformation and a focus on digital experience as a differentiator has become paramount to customer happiness and business survival. Research conducted by McKinsey in 2021 showed 71% of consumers expect personalisation and 76% get frustrated when they do not find it. Gartner’s Top Strategic Technology Trends for 2022 report found that the main reason organisations pursue digital initiatives is to enhance the customer experience.
The Paragon DCX report – The world’s gone digital; why haven’t you? – Barriers to, and opportunities for, digital transformation in the asset and wealth management sector – written by London Research, unveils the feelings and opinions of senior executives from across the asset and wealth management industry.
Almost everyone interviewed for the report said the sector is behind the curve in terms of digital maturity, including their own organisation. However, the struggle to instigate digital transformation is not because the Board fails to recognise the importance of digital transformation. All the interviewees said their company had a digital transformation strategy in place. But for most this strategy had ‘got stuck’. The C-suite is more concerned with delivering returns to investors in the face of continuing economic instability while, lower down, middle management tends to be both less focused on digital, and highly risk averse.
Speaking on the findings, Andy Farmer, chief strategy officer at Paragon DCX, commented: “Asset and wealth management has always been a sector based on personal relationships. The difference now is that firms have to start and maintain those personal relationships in the digital space. Yet, it appears that most asset and wealth management firms are still at the stage of digitising their existing processes, rather than trying to transform themselves for the digital world.”
Farmer continued: “A lack of focus from the top on improving the digital experience, or realising this could make or break an organisation, is a real concern. With an increasingly digitally-savvy customer base, who have expectations of a retail-like experience from all brands, firms in the asset and wealth management sector risk losing market share and missing out on new clients and customers – all of which could damage financial performance in the long run."
The report also identifies a number of other barriers facing asset and wealth management companies in their digital journey, including regulatory and compliance issues, siloed data, success measurement, and being able to convince senior management.
It concludes with a number of recommendations for asset and wealth management businesses trying to increase their digital maturity.