Will Digital be the Saviour of Asset Management & Private Banking
Following some recent news about fee passive funds being offered by some Asset Managers, there is a profound crisis gripping the sector of Asset Management and Private Banking. In Accenture recently found when speaking to investors some time ago, that there’s significant opportunity for firms that offer digital technology, particularly around filling gaps in investor knowledge, augmenting the existing relationship and improving investor satisfaction with their advisors and institutions. The predictions that were made about the sector are coming true much faster and worse than everyone imagined.
Over the last 10 years 86% of Active Managers have not outperformed the broad indices like the S&P500 and neither were the hedge funds on aggregate able to do this. AuM fees are collapsing all round and digital FinTech are pushing Private Banks to go Digital in their client interactions.
Robots will soon replace all non-essential staff Big Data for research, portfolio and wealth management with regulatory-compliant Robo-advisors both for the simple conversations, process assistant, VIP concierge and advisor to the advisor In a next stage Blockchain will allow greater efficiencies throughout the whole value chain for all asset classes from front to back
What is then the future value proposition of Asset Managers and Private Banks?
We now see that cost cutting needs to be so drastic that we prefer to talk about redesigning the business architecture of the institution on a zero cost basis – from the ground up, basis point by basis point of cost and revenue.
On the revenue side, Private Banks are rediscovering the merits of Net Interest Margin, namely by offering structured real-estate credit to the UHNI. But they are all scrambling to rebuild these competencies.