The self-service revolution

Category: Asia, Global, U.S.A.
By Laurent Laclaverie

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The self-service revolution has seen digitally empowered clients seize control, leaving all but the best firms to play catch-up.

So what happens when digital-savvy customers encounter an investment management industry in which almost two-thirds of firms rely on systems from 2006 or beforei?

In this article, we look at how innovations in online retail set the bar for customer service across all sectors, including investment management, and why an explosion of information has left investment managers in urgent need of tools that can filter data and increase transparency. We consider how clients actually use digital tools and how investment analysis platforms like StatPro Revolution give investment managers the self-service tools they need to improve client communication, risk-management and decision-making.

Customer power and the self-service dream

Historically manufacturing scale was the path to domination. Back then, firms like GM ruled. Later on, supply chains (think Walmart) or information mastery (think Google) brought dominance but today, only customers matter. We have entered the age of the customer and the firms who succeed today are digital disruptors who use tech-enabled client engagement to get ahead.ii

Customer demands are shaping propositions

Retailers like eBay and Amazon have sold us the self-service dream. eBay allows you to find almost anything you want and name the price you are willing to pay. You can check a supplier’s credibility and you can check out with PayPal. You do most of the work yourself, creating an efficient business model for eBay, but that’s okay because you are exchanging your labor for increased control. Consider Amazon, a brand that’s created an eco-system of products, sellers and resellers. At every stage, its propositions respond to the specific needs of customers, booksellers and the company itself. These retailers have set the expectation bar and now every other sector including investment management, must play catch up.

Self-service is not an economy option, it’s a way of letting clients take control and customize their experience.

Welcome to the knowledge economy

Clients love self-service tools that let them filter information and customize options for one simple reason: an information explosion that’s created an urgent need for tools that make it faster, easier and cheaper to process information and make decisions.

The cost of information

76% of investment management employees say that during the last three years more of their time has been spent finding and reviewing information.iii With the regulation burden increasing, it is more important than ever to stay on top of the facts but, naturally, that comes with a cost attached. JP Morgan will reportedly spend an additional US$4bn and commit 5,000 extra employees this year to clean up its risk and compliance issues.iv With clear-up costs so high, the benefits of clean, accurate data that can be quickly routed to the right person are obvious.

Information hungry HNW investors

Corporations aren’t the only ones obsessed with information. According to Scorpio Partnership, HNW investors spend upwards of 19 hours per week using digital channels to stay in touch. One in ten of them go online daily to monitor investment performance and 51% actively use digital tools for portfolio evaluation.v

Self-service investment management

With proven demand for investment analysis tools at both an individual and institutional level, why has the investment management industry been slow to adapt?

Comfort in complexity - For a long time there was no need to change. Operating margins were healthy and providers were quite happy with complexity but now transparent simplicity tops today’s agenda.

Fear of the unknown - For decades, the industry hid behind secrecy and for many, changing that feels uncomfortable. The fact is, clients will no longer tolerate opaque business practices.

Data disasters - Many firms struggle to collect and share accurate data. Plagued by data discrepancies and legacy systems, information sharing is fraught with difficulty.

Opportunity knocks - The upside of coming late to the party, however, is that the opportunity to improve operating efficiency and cut costs is huge. Whilst sectors further along the digital maturity curve may find it increasingly hard to find further efficiency savings, within investment management the opportunities are clear.

Clients demand more - It’s the richest clients who are most bought into digital services. High-net worth investors worth over US$4 million place about three times as much importance on their wealth manager’s blog posts and social networking presence compared to those with less than US$500k.vi 75% of these richest investors already use mobile and tablet apps, compared with just 35% of those with <US$500k and 46% of HNW investors plan to use secure investment portals “much more” than the 3.5 hours per week that they currently spend on them.vii Clients, it seems, are already bought into the self-service revolution.

Investment analysis tools that connect the circle

Historically, front-office operations have been kept separate from middle and back-office functions, but today not everything needs to remain in silos.

Analysis tools that help investment mangers to make decisions can be used by clients to track performance or by compliance officers for regulatory oversight. The result is cost efficiencies and competitive advantages that stretch across the whole business.

Creating value throughout the ecosystem

Within the investment management ecosystem of asset managers, distributors, administrators, advisers and personal investors, there are issues that affect everyone. Everyone, for example, wants to be able to accurately track performance or monitor risk.

In the past, sharing information with partner firms was expensive because each user needed an individual license. StatPro Revolution has changed that by making it possible to grant free access to portfolio tools.

Completing the circle: A comprehensive set of benefits for all

StatPro Revolution has already embraced the self-service revolution, giving clients:
•    Control of their costs and the ability to drive efficiencies;
•    The increased transparency and risk management they crave;
•    Ability to share performance data with anyone;
•    Tools to create loyal engaged customers;
•    Drastically improved oversight and ability to cut the cost of regulatory reporting.

A rapid shift to digitally enabled self-service is inevitable. The only question is who will seize hold of the opportunities first?

Visit www.statpro.com/self-service to download the complete white paper.


i CEB Tower Group
ii James McQuivey, Digital Disruption
iii CEB TowerGroup, Top 10 Technology initiatives in capital markets for 2014
iv CEB TowerGroup, Top 10 Technology initiatives in capital markets for 2014
v Scorpio Partnership, Futurewealth research 2014
vi Scorpio Partnership, Futurewealth: Helpful Investment Technology
vii Scorpio Partnership, Futurewealth: Stepping into the communication age