How will Brexit affect the digitisation of asset management?
Over the past two or three years, UK’s asset management industry has opened its eyes to the benefits of digital. Some have transformed their fortunes, while others have lost theirs as a result of misguided and costly investments in tech, teams or functionality.
Whatever their digital aspirations, the need to transform is not going away. Shrinking margins, growing competition, the advent of fin-tech and the growing need to self-serve is pushing the CMOs and CTOs of this world to unveil their digital roadmaps; plans that will increase AUM, make operational savings and enable them to be the default asset manager of choice.
So, as we approach the planning phase for FY17, what impact will the referendum result and impending triggering of Article 50 have on the digitisation of the UK’s asset management industry? To find out more, we spoke with three executives at ORM to get their take on the impact of Brexit.
Keith Nation, Managing Director & CTO
“Access to the EU has certainly not hindered the digital industry, providing a common market for skills and services. The emergence of UK Fintech, with London as the hub, demonstrated how successful this partnership could be with EU passporting allowing tech providers to have regulated access to the whole of Europe. The Brexit decision made by the British people at the end of June and subsequently endorsed by political leaders is now forcing the digital industry to adapt.
With uncertainty comes opportunity and the good news is that digital technology providers are best placed to absorb the impact of that decision and innovate in the process. As with the 2007 banking crisis which gave rise to peer-to-peer lending as customers shunned traditional lenders, so too new business models be delivered in a post-Brexit world. As political uncertainty starts to lessen and decisions that directly affect our industry such as skills migration and data protection are taken, so digital entrepreneurs will feel empowered to invest and move forward.
But what about those more established businesses, the ones who have traditional business models that perhaps can’t adapt as quickly? For them, being customer focused and digitally enabled is more important than ever. As ever, they need to keep the customers they have, attract more and become more efficient in the process. Those who already have transformation programmes in place to achieve this are best placed to succeed and out-perform their competitors.”
Andy Farmer, Executive Director, Strategy
“I think Brexit represents an opportunity for Asset Managers to use digital content to gain greater traction with their clients and prospects.
With the uncertainty around the type and speed of deal the UK will strike with Europe, both professional and private investors are looking to protect their portfolios or to seek out value investment opportunities that may be ripe for growth having bottomed post-referendum.
That means, more than ever, they are looking for the inside track onmarket and geopolitical trends to stay one step ahead. They are also monitoring their portfolios more often and for longer. With the clients we are working with, we have seen an increase in website traffic since Brexit – particularly to fund centres and insight articles – with peaks and troughs as key events unfolded.
Asset Managers who provide real-time, up-to-date fund information will drive greater engagement and visits from these audiences. Publishing quickly online with topical thought leadership, from reputable experts, is likely to increase trust and customer loyalty. We’ve seen our clients gain traffic and shares through these types of insight pieces’ days after Brexit.
With Brexit potentially triggering increased online monitoring activity from investors I also think the role of Preference Centres is going to become more important. At the best oftimes users don’t want to have to navigate through large amounts of complex data and long-form PDF articles to find the information they need – they would prefer to have to their needs anticipated and the work done for them.
The ability to select funds and insights to monitor and receive trigger alerts by region, asset class, theme or strategy, removes much of this effort and provides a more targeted, valuable service.In addition the ability to capture and analyse these preferences can help organisations understand more about their audiences.
Knowing which content themes are popular and using these to further personalise the online experiences could have been a real win in the days after Brexit – especially when using digital to enrich, quicken and enhance personal relationships with the professional investment audience, or to give private investors the right type of reassurance without the high overhead.”
Mark Hopkins, Executive Director, Client Services
“My initial reaction to Brexit and its impact on the UK digital economy was gloomy. I felt the referendum decision would wreak havoc on confidence, projects (both in flight and in planning), not to mention the loss of experienced, foreign talent. Over the past few days, however, I have started to think more positively.
While there's no doubt of Brexit's negative impact on the generation of digital practitioners who may have to return to their native countries over the Channel, the fact remains that a large percentage of this talent have been plying their trade in the UK for years; they have homes and families here, and naturally a strong legal argument for staying on.
The fact that the pin in the Article 50 grenade may never be pulled is also a possibility. Even then, there's a two-year-plus hiatus before it can become official – important time, I'd say, for digital businesses to prepare properly and transition to this new era without pain.
If anything, the possibility of Brexit reinforces two things to me: our industry needs to refocus its efforts on talent attraction, retention and development more so than ever before. Now is the time to shore up where you're weak; to look after your existing talent with proper training and growth plans, and to make sure the appropriate succession planning is in place.
(Talent, naturally, also exists outside of the EU; so perhaps cast your net further afield if the UK can't offer you what you need. Australia, Canada and America all offer strong candidates.)
My other point is digital businesses will need to be stronger on the benefits of digital. Wafer-thin justification for investment in expensive, shiny new functionality doesn't cut it anymore. It has to tie back to real return – and I don't mean 'just' pay back on investment. It must be at an impressively high ratio, as well as show an uptick in customer engagement, operational efficiency, market share and shareholder value.
With the right planning, this is all possible to roll out and measure, so expect to need to show the strategies, ongoing optimisation plan and ROI/measurement (as well as the project team function) in order to convince Ops Directors and Boards of the merits of your business case.
Ultimately, while I will never support Brexit as an idea, we have the time to plan and mitigate the worst of it. It may still never happen, and the zeal for digital growth may sustain us yet, but I - for one - am not going to leave anything to chance.”