In a year that has been both challenging and unique, it is equally difficult to identify the most important digital trend that asset management companies will face as we approach the end of the year. This is because, as we know, the health emergency that has involved every country in the world, including Italy, has changed the cards on the table in all sectors, including for managed savings (we talked about it in the previous post).
This premise essentially serves to warn the reader: the main “trend” of the asset management market, which unites it with all other sectors of the global economy, is uncertainty. It represents a sort of presupposition, of “trend” in the light of which it is necessary to read all the other trends that subsequently will be listed.
The 5 digital trend of asset management companies
Before listing the future digital trend that the asset management companies will face, it is good to understand the current situation of the sector, if only because the economic context will certainly influence the changes in the coming months. It is interesting to look at what was said by Giovanni Sandri, who heads up BlackRock Italy, during a recent interview with Focus Risparmio: “This crisis does not create new trends but acts as an accelerator to those already in place within the industry” (focusrisparmio.com). So you can expect that many of the trends seen in 2019 will continue in 2020, perhaps with some specific news or slight variations. The acceleration aspect of this quote is also interesting.
Compared to many sectors, which have suffered a severe recession in these months of lockdown, the asset management sector was in some respects “favored” by the Covid-19 emergency. Italy already normally has a very high level of personal savings, as indicated in the seventh edition of the European Consumer Payment Report, which showed that 84% of Italians put aside a percentage of their salary every month. However, compared to a European average of 75%, this “tension” to savings has increased further as a result of the health emergency (intrum.com).
After all, it is natural if you think of the uncertainty and doubts that the lockdown period has left behind.
Precisely for this reason, after the peak phase of the pandemic, there has been a general increase in the propensity to save, which on average in the United States and the European Union countries has gone from 12.7% to 17% and which has materialized in Italy in a considerable growth of bank deposits (rep.repubblica.it). To give an order of this magnitude, in May 2020 alone, Italian savers set aside €16.8 billion, a figure 5 times higher than that saved in the same period last year.
This confirms that saving has become fundamental and will be even more so in the near future in a cross-cutting way, affecting people regardless of their age and social background. It is precisely in light of this that we understand what the first digital trend in the managed savings market in 2020 could be.
1. Saving by app
In the near future it is easy to imagine that more and more applications dedicated to managing savings will be launched and developed. Among other things, the first and most interested users of this type of services are young people, who are real “serial savers” who use technology to manage their savings.
To demonstrate this, research by Hype notes that there are many active users for these digital savings solutions (money.it). Suffice it to say that this app currently counts 790,000 active users who have already saved over €160 million. You can imagine, therefore, that in the future the use of these applications will spread even more, becoming a consolidated habit throughout the population. Moreover, several articles have already been written on the subject, which highlight how digital transformation has allowed the development of various mobile solutions for the autonomous management of savings (wired.it).
From this trend two considerations can be derived.
- The first is that the concept of saving, above all for young people, has changed: you don’t save just “to save”, but for short-term objectives, such as for purchasing a car or saving for a big trip: that’s why all the apps foresee the possibility to establish smaller, more accessible thresholds of savings that are designed to fit the customer’s needs.
- Secondly, practically all of these apps always take the user’s characteristics into account in order to set monthly targets correctly and to draw as complete a picture as possible of his spending and consumption habits.
This last aspect recalls the second digital trend within the managed savings market, which is not really new.
2. Big Data for the personalization of managed savings
The close connection between digital transformation and personalization has been well known for some time now: wherever digital solutions have arrived, they have always been used to respond to the growing consumer demand for personalization. This is all the more true in a context like that of managed savings, where every solution offered must be designed and built appropriately according to the customer’s profile, his needs and characteristics – among other things, this is also a duty required by law (diritto.it).
Where is the novelty of this trend then? Certainly in the tools that can be used, that is, Big Data. After all, as we have seen, apps give the developer the possibility to collect relevant information and to aggregate it, allowing them to offer services that are suitable for each saver. Obviously, in order to collect data it is not necessary to develop ad hoc applications; there are many other ways to get the relevant information, such as the use of newsletters, or analysis of research carried out by users, or even through the detection of online discussions on the subject.
However, the management of Big Data is a relevant trend not only because it allows you to “know your customers better” and therefore to offer them the best offers. On the contrary, the usefulness of Big Data is even more evident when it comes to beating the competition.
Those who have integrated Big Data into their business have managed better than others to stand out by placing their products more effectively than competitors (wallstreetitalia.com). Likewise, Big Data is incredibly useful when it comes to deciding how to help customers build their investment portfolios. It is precisely through Big Data that it is possible to have a more complete overview and thus face every market operation with the correct perception of risk.
3. An artificial ally for asset management companies
Any savings management company can achieve great benefits not only by learning to analyze the Big Data it manages to collect from the web, but also by using a technology made more and more accessible by digital transformation: we are talking about Artificial Intelligence.
Artificial intelligence is becoming more and more a widespread and implemented solution among asset management companies, which have realized the great versatility of AI and the considerable advantages it offers once it is integrated to their core business.
A possible application of this technology is represented by the use of increasingly intelligent and refined software to identify the best and safest investments, also considering the economic contingency and the type of risk customers are willing to take. In this sense, what until a few years ago seemed pure science fiction has now become reality: IBM’s Watson is an artificial intelligence system responsible for a new investment fund operating in the U.S. market (focus.it).
This means that it is the computer that decides, in full autonomy, which mix of stocks, bonds, and other financial securities to invest the money of customers, replacing the work of analysts. Among other things, one of Watson’s strengths is its ability to analyze an impressive amount of data in just a few hours, which would cost its human colleagues several days of work. This does not mean that the replacement is absolute and immediate, but it is clear that the power of analysis of this kind, at the service of any savings management company, could be a formidable resource to identify the right investment for the right customer at the right time.
Moreover, another very interesting advantage that artificial intelligence offers within an asset management company is that it is able to significantly improve the Customer Experience of each customer. Companies can effectively profile their customers with the use of machine learning, which through a simple dialog with the customer can discover his needs and, consequently, the best answers to provide. In this way, the software can easily indicate to the savings services that are most suitable for his profile.
4. Saving becomes “inclusive”
Another digital trend of asset management companies that is not exactly digital – but which has its main repercussions in the digital sphere – is that the market is becoming increasingly inclusive. In fact, the financial environment has always seemed too complex for non-experts and this pushes people to not feel safe or able to consciously entrust their savings to someone else. Technology is the solution to this problem.
In a recent interview, four different Italian asset management companies have declared that it is thanks to the digital transformation, in its different forms, that has made it possible for the asset management sector to be more accessible, transparent, and safe even for those who do not understand how it works (it.fundspeople.com).
As a natural consequence of this, social networks are the tool that all asset management companies should implement in their communication strategies, since it is precisely on these channels that it is easier to establish a closer and more human relationship with existing or potential customers.
5. A business more and more in the cloud
Another trend that is gaining importance recently is the use of cloud technology within asset management companies. There are a growing number of examples of asset management companies that are increasingly approaching this new tool for internal organization and management.
Think of IdeA Fimit, the savings management company of the De Agostini group, which has adopted the cloud to manage all its portfolios through a conversion process that began a few years ago and that has stabilized over time and has begun to show its considerable advantages or take the case of Etica Sgr, which has seamlessly integrated cloud technology into all aspects of the business, from document backup to email exchange management.
Among other things, the approach between asset management companies and the cloud also manifests itself in the interest shown in companies that base their business on the development of this digital solution, which are becoming more and more strategic subjects on which to invest (gellify.com).
What is “old” is not out of fashion
In conclusion, if these are some of the most relevant digital trend of asset management companies for the near future, one thing must be clarified: the trends outlined last year have not lost their relevance at all; on the contrary, they remain valid and represent a route that should only be integrated. For this reason, the Customer Experience remains relevant, which must be as immersive and interactive as possible, just as it is essential that asset management companies focus on the concept of “mobile first” for their services.
After all, the thread that holds everything together is always digital transformation, not so much as technological innovation, but as an innovation of the mentality for the business. This is perhaps the big trend that inevitably contains all the others and that is bound to change the asset management industry in ways that are more unpredictable than ever before. For this reason, it is important that every operator is always ready and up to date, because it will be the next innovation that will determine the winners and the losers.