Digitization is a megatrend that financial services firms cannot ignore. As more FinTech players enter the industry, massive regulatory burden continues and the customer demographic shifts toward attention deficit millennials, financial firms have few levers to drive growth, manage the regulatory burden and retain customers. Just as the Fed have fewer arrows left in their quiver after QE3.
What is digitization?
Before going further, it would help to define what is meant by digitization aka digitalization, the latter being the technically correct term. Digitization embraces the entire continuum. It stretches from electronic artefacts and processes at one end; through the upgrading of legacy systems, connecting silos and delivering new services; as well as big data, advanced analytics and artificial intelligence.
As with any trend that has a lot of buzz and hype (think blockchain, AI, IOT, and digitization), it is hard to get a real sense of what is the true current state of the adoption is. Where in the S curve does the trend stand? What is the average firm doing to address these issues, and most importantly, what benefits can it deliver by adapting and getting ahead of these trends. Furthermore, it pays to understand the trend’s roadmap, pitfalls and alignment with your firm’s strategic objectives to get the bang for the buck.
Leading edge financial firms that understand the trends in technology and implement solutions to take advantage of these shifts are accruing immediate benefits around efficiency, reduced costs, agility, transparency and more. Additionally, these firms are laying the foundation for growth and customer centricity. Financial firms that continually evaluate the benefits of digitization understand the importance of, and, the need for strong governance and visibility, which is necessary for managing complex processes ranging from: product development, product management, vendor risk, client onboarding, as well as broad based improvements in a multitude of other processes. Moreover, financial firms can turbo charge processes through templatization, automation and audit-acing traceability. Early adopters have reported green shoot benefits such as stronger market positions, better client experiences, and faster time to market among others. Ambitious, but achievable.
Digitization is not optional
Why is digitization imperative for firms across financial services industry? Why is it considered the new “heartland technology”? What benefits can it deliver and what is the adoption level across financial services industry? Are you doing enough to digitize your business, or suffering from FOMO (fear of missing out)? Even worse, will your firm be disrupted out if it doesn’t embrace this trend? How far along the digitization continuum does your firm need to be? Will AI be a significant revenue driver for your line of business in ten years? Or will AI eat your lunch in ten years? Partial disruption, where the incumbent legacy financial firms coexist with the new FinTech heavy disruptors, is the most likely scenario, according to a recent study by Professor Amin Rajan.
"Early adopters of digitization have reported green shoot benefits such as stronger market positions, better client experiences, and faster time to market among others."
Professor Amin Rajan’s study on the Digitization of Asset and Wealth Management, which was based on a global survey of 458 asset and wealth managers from 37 fund jurisdictions with total AuM of $32 trillion, has answered these questions and more. Dassault Systèmes in collaboration with Professor Rajan, and two senior executives in the Asset Management space will be discussing digitization in an upcoming webinar on September 25.One thing is for sure: asset and wealth management are set to decouple from a stable past and re-anchor to a disruptive future. The only unknown is the timing.
To learn more, download the Digitization paper here. You can also tune into our live webinar, Embracing Digitization: Why Digital Innovation Has Become an Imperative for Asset and Wealth Managers on September 25.