Pressures on asset management companies are higher than ever, with digital swiftness and new regulations defining the environment. If that were not enough, a new field of competition has also emerged in line with changing user demands: investor experience.
A changing industry
Asset management used to target wealthy individuals, for the most part, who often had private bankers. Fund houses had adapted their governance models, cost structures, and marketing efforts to these types of clients, creating an industry that could be considered more B2B than anything else.
However, the digital transformation has either enabled or been driven by—probably a combination of both—a coinciding revolution of mindset. Barriers to entry have been lowered everywhere, from authors self-publishing e-books to entrepreneurs launching digital companies. Investment is no exception: with a market being established for investors who want to invest less money—between €1,000 and €100,000—than the traditional norm, robo-advisors and social investor platforms have gained traction in connecting these users to what they want. For users, the mindset is one of empowerment, be it to publish a book, start a company, or invest in a fund.
Thus, asset managers now realise: it's all about investor experience.
Some fund managers are even trying to bypass their distributors in order to simplify the customer relationship even more, though this remains rare. Whatever the tactic, the truth is that the market for customised services and personalised investments has emerged. Customers don't really understand (or care) why buying a fund should be too different to buying a lava lamp on Amazon, so all that's left is for fund houses to make it happen.
Tricks and tech
At the heart of the investor experience is the investor journey, a path along which many points of interaction with customers can happen. With robo-advisors, this journey takes place entirely on a clean, clear, digital platform: an algorithm supplies investors with customised portfolios and they get 24-hour access, phone and tablet apps, and all the rest of it. Other startups have focused on onboarding, for example, abandoning the traditional approach and replacing it with a fresh, tech-driven one. Neobanks tend to follow this approach, providing an ultra-simple onboarding experience.
Ultimately, the investor journey should appear simple to the investor, even though it is highly complex. Even some of its complexities, like regulatory requirements, can be transformed into enjoyable experiences: smart questionnaires, for example, take gamified approaches to MiFID compliance.
Overall, the shift is towards understanding and catering to the end-client. Instead of telling him/her which funds are best, investments are personalised and recommended on an easy-to-use platform with minimal administrative headaches. Also valued by customers is transparency, in reaction to which fund managers are seeking to create a stronger and more transparent link between company and customer.
Looking to the future
These changes are undercutting and widespread, but what does it mean for fund managers today? First and foremost, it means big opportunities for collaboration. A few years ago, disruption was a source of fear. Nowadays it doesn't mean destruction, but rather new and highly potent tools for engaging with customers in meaningful ways. There are creative fintechs for every part of the value chain, and what's left, to remain competitive, is to strategically partner, reinvent, and update.
Read more customer experience insights in the Khube Mag special CX edition.
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