By Rishi Aurora
The financial services industry has long been at the forefront of the digital revolution. Asset management, however, has hardly been touched by digital. But, the trends are changing fast.
According to data analysed by Association of Mutual Funds in India (AMFI), the total assets under management (AUM) by Indian asset management companies (AMCs) has grown from Rs 9.03 trillion as on January 31, 2014 to Rs 23.37 trillion as on January 31, 2019, which is more than a two-and-a-half-fold increase in a span of five years. This is only set to increase further—especially on the back of the government’s Digital India agenda and favourable demographics. High net-worth individuals (HNIs) account for more than 30% of the total AUM in India, and with the country ranked among the top five in terms of HNIs, it could become one of the most lucrative markets for asset managers. Trends such as evolving consumer expectations, mushrooming fintech startups, entry of global players, technology innovation and increasing focus on security are throwing open huge opportunities for Indian AMCs. But they are laced with challenges, which can be addressed by adopting a structured digital approach.
Betting big on digital
Technology will be a key enabler to drive innovation, speed and accuracy, and create differentiation. AMCs should consider repurposing their organisations for a fully digitalised economy rather than only looking at using digital for cost optimisation. To capitalise on the shifting market demands and gain a sustainable competitive edge, AMCs should adopt appropriate organisation-wide digital strategies and business operating models such as:
Fully digital platforms: Focus on being a low-cost provider with an intuitive digital platform that can offer fully automated, low-touch portfolio management and advice services. Use the latest digital technologies to drive better investment outcomes through increased efficiency and more focused management and asset allocation design, freeing up advisors’ time to focus more on customer needs.
Virtual advisors: Leverage next-generation technologies to digitalise the client-advisor relationship, providing automated investment portfolio with on-demand access to advisors. Tap the digital savvy millennials and HNIs with digital interactions such as virtual advice, but without eliminating the human touch.
White label advisory platforms: Purchase or partner with platforms to provide an end-to-end solution to independent advisors. Build white label automated advisory platforms to digitise back-end operations and achieve lower operating costs. Enable machines to handle complicated investment management tasks, asset allocation and rebalancing.
Simplified self-managed platforms: Simplify active portfolio management for investors who desire to make their own investment decisions. Add richer features and digital touchpoints to promote a collaborative investment management experience. Use advanced analytics, combined with behavioural analytics, to offer personalised recommendations and create a holistic solution for the customers.
As AMCs take the digital route, they should ensure an ecosystem that offers services across technology, processes, skills and data. They should also build a robust cybersecurity programme to protect their systems from breaches.
The writer is MD and lead – Financial Services, Accenture in India
