How Asset Management can fully embrace digitalisation

Embracing digital transformation and the benefits of a robust data strategy

According to AIMA’s recent report, both fund distributors and asset managers have invested significant sums into their digital propositions. The web-based interfaces that investors now use to research and place their trades have never been so user-friendly. At the same time, online fund platforms have become the norm for investors seeking to invest in a growing range of assets within European markets.

The industry has been exploring the potential advantages that digital transformation has created for back and middle office operations.  Up until now, this process has remained complex in terms of being a mixture of inhouse and outsourced service providers supporting fund selection and distribution. However, thanks to digital transformation, this legacy process has started to embrace digital solutions that offer firms greater control and transparency when it comes to fund operations. The greatest challenge that firms now face is being able to continue forward on this path of digital transformation and establishing the framework that is needed to implement these goals. There is often a lack of framework readily available as a good starting point, which can be damaging to implementing new data management, can create inefficiencies so fundamentally this can be costly and time consuming.

In order to overcome these challenges, firms need to consider how best to implement a robust data strategy in which they can fully understand all information with a 360 degree view, whilst operating with the highest levels of security and also be compliant to the required level within institutional banking.

Digital transformation comes with its own hurdles. According to PWC “The Asset and Wealth Management (AWM) sector plays a vital role in managing the world’s financial capital, and is estimated to be worth USD 145 trillion by 2025”. This, amongst other things, makes the industry attractive to cyber-criminals. As well as the potential financial risks due to cyberattacks, firms can also be at risk of reputational damage caused by a public cyber attack. Last year, Stéphane Nappo of Société Générale was quoted in Deloitte Insights to have said “It takes 20 years to build a reputation and a few minutes of cyber-incident to ruin it.” This can be a reality for firms should they experience a cyberattack and not have the infrastructure in place to mitigate it.

In order to overcome cyberthreats, firms should consider strengthening their managed detection and mitigation strategy. RFA work with clients to help them develop a robust strategy, understand their risk posture and build cyber resilience. Through this strategy firms are able to manage their cyber risks, understand the current environment in which they operate in, and have strategies in place should a cyberattack happen.

The process of digital transformation in the asset management sector is not slowing down. Managers must continue to  embrace this change in order to remain competitive with new market entrants to the industry. This calls for a robust cybersecurity and data management strategy in order to keep up with the pace of change.