Monday, 11 January 2016

Digital Distribution is a must for Asset Managers in 2016

“When it comes to a move toward electronic fund distribution, for the asset management sector, change is mandatory,” says Ernst and Young.

Here is why: According to EY, there are some interesting trends that will drive the electronic platform distribution:

  1. Capital markets are quickly moving from face-to-face negotiation to embracing automated trading systems
  2. Customers, in particular millennials, prefer on-demand customized information delivered through the web
  3. Investors are more sophisticated and demand transparency, as technology infrastructure and the power of computers grow

In addition to these trends, there are plenty of new regulations that are put in place in various geographic locations. This means that platforms will need the facility to adjust to both geographic and demographic market sectors, as well as the ability to customize specific investor experiences. A segmented market and strategy is a must as there is no way to fit all with one approach. Digital distribution is the enabler of just such tailored strategies.

Finally, if nothing else then Cost is what will force a lot of firms to adapt to the new world of digital distribution. As we witness a rise in platform distribution, it is inevitable that margins will be squeezed. EY agrees that while some big names in the industry can build economies of scale and therefore "attempt to enhance or at least protect some degree of pricing power, particularly through investment in customer experience and building brand identity," most firms will have to adapt to low margins and increasing market demands for more tech services.

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