Asset management has always been an important market within the financial system. In an attempt to cope with the stress of the financial crisis some years ago, banks have invested heavily in the sector, leading to a significant increase in asset management.
Since 2004, the asset management industry in Italy has raised an incredible €1,200 billion in assets under management, an increase of 137% as of November 2017. Basically, an unstoppable ride of about 14 years. However, this expansionary phase seems to have come to a halt in 2018, continuing into 2019.
According to Wall Street Italy, in the first six months of last year, €9.3 billion was raised, with the months of May and June showing negative results. If it is true that the beginning of this year seemed to be more promising with net inflows of approximately 55 billion, we should not be fooled by the data: this positive result on the balance is actually due to the entry of €53 billion into the market as a result of an extraordinary transaction carried out within the Poste Italiane group, which granted the group SGR an institutional mandate for the management of BancoPosta’s assets.
Otherwise, there are very few positive signs. Many managers recorded modest increases compared to the past (except for the Generali Group), while Amundi, for example, recorded the worst negative change.
Also in line with the trend are the figures for March 2019, also released by Wall Street Italia, according to which: net inflows from the asset management industry, which closed at -€0.6 billion, with portfolio management reported positive flows of €0.1 billion, as opposed to the performance of collective management (-€0.7 billion). This is echoed in the April 2019 results. Assogestioni confirms that assets under management in April closed in the red with a balance of €3.9 billion, a further deterioration compared to March, which reached -€597 million due to outflows from both open-ended funds and portfolio management.
Obviously, these are not worrying numbers, but in a sense, we must start to take them into account, to avoid that the downturn, now slight, becomes really relevant.
There are three potential causes of this downturn:
- First cause: the wavering trend is intrinsic to the financial markets. It is hard to believe that a sector, especially the financial sector, will always be in steady growth. In 2018, the financial market showed signs of great volatility and the consequences were also felt in 2019.
- Second, the confidence that binds investors to asset managers is failing. It is no coincidence that in the last 10 years, bank deposits have doubled, reaching an average of about €21 thousand per capita. It means that Italians, as Il Sole 24 Ore write that Italians, therefore, seem increasingly fond of liquidity and more reluctant to take risks, as demonstrated, for example, by the growing disaffection with government bonds, once so beloved. According to a study by Esma (the European Securities and Markets Authority), in the decade 2008-2017, the costs of equity instruments placed in Italy (including subscription and redemption commissions) accounted for 37% of gross performance, well above the European average of 24%. In the case of bond funds, commissions account for 33.5%, compared to the continental average of 27%.
- Thirdly, compared to the past, the trend is that Italians save less and less. Since about 2004, Italian families have drawn on their savings to cope with the financial crisis and have preferred to use debt as a tool for spending and investment instead of reducing their consumption. In addition, in recent years, a new so-called aspirational social class has emerged, one that aims to maintain a rather high standard of living without being able to afford it.This standard of living consists of investments that are not conspicuous, but frequent, and mostly related to services, such as travel, eating out in restaurants, and higher education, like master’s degrees. These young adults tend to spend little but often, preferring experiences to objects, even in the face of an often low and unstable income.
Of the three causes listed above, the last two are certainly the most interesting.
It is, in fact, a question of putting into perspective a series of activities that allow consumers to regain confidence, and, at the same time, to reverse a certain type of trend, prompting them to evaluate the managed savings as an attractive option.
In both cases, adopting a digital marketing strategy can be very useful. It is no mystery, in fact, that the network is the ideal tool for reaching a greater number of savers in an increasingly effective way. However, although the benefits are clear, it is not always clear how to get there.
In an interesting Forbes article on digital marketing in the financial sector, the author posed the question, borrowed from the language of baseball: “What inning are we in?” In other words, where are we? The article noted that, although the financial industry was among the first to adopt digital tools, in general, most companies are not even at the first base when it comes to digital communication.
That’s for a variety of reasons:
- The first is that an investment in communication does not immediately yield returns in terms of profits, but takes a little longer to show its benefits.
- Secondly, there is always some reluctance to use the “new” means of digital communication as real marketing tools.
- The third reason, closely related to the second, is that companies are often afraid that social activity can, in some way, affect the brand equity that has been built up.
- Companies often lack the skills to integrate digital and social tools into a communication strategy, especially when talking about the latter. Among other things, it is not only digital skills that stand out, but also the investments needed to train human resources are lacking.
Taking advantage of such tools means to benefit them in terms of intercepting younger members of the population, who are not only more digitally advanced but also more interested in capital investments, even risky ones.
Among other things, they are the same people who, according to a research conducted by the Demia Institute for Asset Management, are willing to invest and buy financial products through the main digital platforms (Facebook, Apple, Microsoft, Google and Amazon).
The situation is, therefore, this: there are great opportunities and also the means to seize them, but in a sense time is of the essence. There’s only one question left: where do we start? No doubt from a list of things not to do.
1. Don’t leave the use of social media out of your digital strategy
It goes without saying, but it’s true: no business can do without social platforms.
The reason is simple: social networks allow financial intermediaries to maintain relevant business relationships with potential clients and colleagues. A good percentage of the same operators in the sector confirmed that social networks have played a fundamental role in marketing activities and in the procurement of new customers.
Excluding such platforms basically means depriving your business of new and effective touchpoints and giving up on reaching one’s customers in a way that is relevant to them.
2. Don’t be like everyone else
The biggest mistake is to think that you can just use the same old classic marketing messages also on social media. On the contrary, everything must be created to stand out.
In looking at the communications of 100 European and American companies in the financial asset management sector, the words used to describe their business are always the same and more or less always recurrent.
And it is paradoxical if we consider that the savings management industry, as well as that of financial intermediation in general, has a very technical, specific and diversifying language at its disposal.
In this sense, presiding over social networks without being creative or, at least, different, means risking losing one’s voice in the crowd.
3. Talk about yourself
Among friends, there is always one who tends to talk too much about himself, and other people get bored as a result. The same is true when you talk to customers.
Digital transformation and the advent of social networks have radically changed the structure of communication. It is no longer necessary to reason according to the logic of one to many. On the contrary, the network has reduced the distance between the user and the company, and the dynamics have obviously changed: the user speaks and treats the company as his peer.
This means that it is no longer (only) the object being sold that makes the difference, but above all having a high-quality relationship with the consumer.
From this point of view, social networks provide the company with a formidable tool to meet its customers, listening to them and processing their requests in a fast, efficient and personalized way.
In other words, better use of social media means a better customer experience, which is the modern key to a successful business.
4. Not to use all technologies available to you
Digital transformation has provided asset management companies and financial intermediaries in general with a range of tools that can be very useful for growing their business.
One of these is Blockchain technology, which is a data collection and management system structured in blocks that contain transactions and that are linked together so that each transaction initiated on the network is validated by the network itself through the analysis of each block.
In essence, this makes information unchangeable and its protection more secure even if shared.
Thanks to this technology it is possible to synchronize operations, i.e. to give managers, platforms, traders, fund managers, custodians, and clients the possibility to access data freely and simultaneously, avoiding costly information misalignment.
The first tests to distribute mutual funds through Blockchain showed that this new way ensures greater security and significant time savings in carrying out procedures that would otherwise take several days.
Another promising technology for the industry is Artificial Intelligence.
Its applications are many: from chatbots, which allow the company to provide a personalized customer experience 24 hours a day, to robo-advisors, such as the one implemented by BlackRock which is able to analyze the market and identify the best investment solutions for customers.
To exclude these and other technologies due to fear or an inability to develop the appropriate skills means sacrificing competitive advantage.
5. Nothing can be improvised
Having a presence on social media and managing it well is not something that just anyone could or should do. Having your own profile on Facebook doesn’t make you a Social Media Manager just having a passion for writing doesn’t make you a copywriter or an expert in SEO.
This is all to say that building an effective digital marketing strategy requires specific skills. Also because, when you use social communication, you play in a very risky field, that of reputation.
Moving without the right skills is perhaps the most serious mistake because it could cause a real business crisis that could impact brand equity.
In this sense, there are two alternatives: develop skills internally, so that the marketing department is prepared, or rely on trusted partners like Doxee who are able to direct you to the right strategies and tools to turn digital into an incredible growth opportunity for their business.
The digitalization of processes, products, and services in banks’ digital strategies must go hand in hand with an increasing focus on customers and their needs and expectations, even in the banking sector. Find out all trends to know in 2019, download the infographic: