Trends that are rewriting the future for asset managers

Wednesday, April 25, 2018 | By Julia Binder

Trends that are rewriting the future for asset managers

My first time at SXSW in Austin, Texas last month provided a number of stimulating and thought-provoking takeaways for asset managers. Most of the sessions I attended were in the “Intelligent Future” track and focused on artificial intelligence (AI) and new technologies which are embedding intelligence in every part of our lives. Several trends asset managers should consider as they position their organizations for the future include AI everywhere, the erosion of trust, and intensified global competition.

AI everywhere

A startling statement made during the first session I attended on innovations in AI, was repeated in one form or another at virtually every other session over the course of the next three days: In the past eight years, developments in artificial intelligence have occurred that the panelists didn’t think would happen in their lifetimes. We are on the brink of a new paradigm emerging every 10 years, or even more rapidly, in the way people interact with computers. Starting with the mouse in the 1980s and moving to the browser in the ‘90s, the smartphone in the 2000s and apps in the ‘10s, we are now moving swiftly to connected wearables and virtual assistants. The smartphone, which integrates previously separate devices for playing music, watching video, and taking pictures, is already being disintermediated by wearables. We’ve written extensively on the impact of automation, chatbots, voice-activated assistants, and connected wearables in Digital Strategy Insights over the last few years and will continue to keep clients apprised of new developments and opportunities.

Erosion of trust

Several sessions focused on the changing nature of trust with the growth of cable news and social media. More and more, younger generations distrust traditional institutions and authorities. We increasingly ignore brand marketing, and rely on influencers, friends of friends, and unverified sources, often for dis- and mis-information. What will this mean for asset management, built on traditional notions of trust and advice? We wrote about the implications in our recent whitepaper on Navigating the Storm: Modern Instruments for a New Era in Asset Management.

Intensified global competition

Underinvestment in technology and education are serious issues in the US. Our schools are still teaching students for the agricultural age, not the jobs of tomorrow. The US Department of Labor has projected that 65% of today’s kindergartners will grow up to work in jobs that don’t yet exist. By contrast, China is investing hundreds of billions in AI, educating its citizens, and formalizing partnerships with leading corporations and research institutions working on AI. If data is the world’s most valuable resource, China’s massive, 730 million online population provides it with the largest supply of human data to use for experimentation and R&D, without having to contend with lack of privacy and security regulations seen in the US and the EU.

Asset managers need to be investing in the future now, with deep investments in workforce readiness, sophisticated technology, and real-time analytics.

Rewriting your future

While these trends may be disturbing to traditionalists, entrepreneurial executives are seizing opportunities to modernize, stay relevant, and explore new ways of conducting business. Two quick examples from outside the industry: WeWork, just eight years old with shared workspaces and office services and locations around the world, is supporting the growing gig economy and reinforcing interdependence and trust among previously unconnected workers. And Adidas, telling a great story as well as positively impacting the bottom line, is not only eliminating disposable plastic from its global campuses and stores but also recycling ocean plastic to make shoes and apparel with a goal of making all their products with ocean plastic by 2024.

So asset managers, how are you rewriting your story to stay relevant in the future?

Research, Analytics, and Consulting

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