Mutual Fund Directors Forum

Transcription

1 Mutual Fund Directors Forum PwC on Asset and Wealth Management Revolution: Embracing Exponential Change John C. Siciliano Senior Managing Director Global Strategy Leader Asset & Wealth Management April 3, 2018

2 Executive Summary Global AuM in USD trillion Products e 2025e CAGR e Global AuM % Mutual funds* % of which active investments % of which passive investments % Mandates % of which active investments % of which passive investments % Alternatives % Source: PwC Market Research Centre analysis Past data based on Lipper, ICI, Preqin, Hedge Fund Research, Lipper, and EFAMA *Mutual funds include ETFs. Passive ETFs AuM should reach around USD 10tn by 2025, up from USD 3.5tn in 2016 Note: Mandates include Separately Managed Accounts, discretionary mandates, advisory/discretionary accounts, and pension asset mandates 2

3 Executive Summary Four trends that will transform the Asset & Wealth Management industry Future of AWM: Four transforming trends New regulations, real-time data, and analytics are making financial markets more transparent. Increased competition and new entrants are disrupting traditional value chains. Larger players benefit from scale economies, and we expect that there will be further industry consolidation. AWM have been filling the funding gaps that have emerged since the GFC. They have been first movers and innovators, providing capital for real asset classes. Equipping individuals to save for old age, as governments step back, will also support growth in AuM Key market dynamics Technology advances will accelerate and drive changes across the value-chain. Technology giants might also enter the sector in developed markets, becoming gatekeepers and flexing their distribution power. Artificial intelligence, robotics, big data, and blockchain are transforming the industry. Active, passive, and alternative strategies are becoming building blocks for multi-asset, outcome-driven solutions. Demand for passive and alternative strategies will grow fast. While active management will play an important role, its growth will be slower. 3

4 PwC Perspectives: Data Analytics & Trends Data & analytics can help Asset Managers improve experience and business impact along the client journey Data & analytics across the client journey Onboarding Capability: Deliver a streamlined, efficient, and personalized onboarding experience Data Analytics Enabler(s): Use discrete event simulation to model process bottlenecks and identify opportunities for improvement or automation; capture client attributes and preferences to customize experiences ILLUSTRATIVE Servicing & Relationship Building Capability: Track public image; identify correlation with market movement and client behavior Data Analytics Enabler(s): Build a listener on message and data of social media and use Natural Language Processing to monitor and analyze public opinion and sentiment and triangulate with client interaction data End Start Engagement Capability: Design more contextually relevant offers and interactions with potential clients Data Analytics Enabler(s): Social media listening to identify potential clients, asset class interest and to assess perception of the firm; omnichannel data collection on and off premises Portfolio Implementation Capability: Offer predictive guidance on optimal allocation of assets to achieve financial goals Data Analytics Enabler(s): Machine learning techniques to mine opportunities and agent-based simulation for validation and testing Maintenance & Review Capability: Provide proactive / pre-emptive investment recommendations Data Analytics Enabler(s): Simulation to evaluate market dynamics and feedback loops to assess risk and optimize around economic scenarios; nowcasting; process mining; 4

5 Shift to Digital Innovation & Data Analytics This leads into Digital Innovation within Asset Management By employing Digital Technologies across their organizations, Asset Managers are minimizing the cost of their low value activities and maximizing the impact of their high value activities to gain competitive advantage. Using key indicators and data to analyze their business and drive efficiency Investments Operations Clients & Distribution Cost Value Cost Value Cost Value Digital Decision Automation Client Engagement Empowering the investment decision Operational flexibility and standardization Enhanced client relationships and innovative fund distribution Front Office Middle & Back Office Sales, Marketing and Clients Research & Analytics Trading Trade Support Data Maintenance & Reporting Research & Analysis Strategies / Modeling Performance Attribution Analysis Portfolio Rebalancing Risk Analytics Portfolio Analysis & Stimulation Quantitative Analysis Order Preparation Pre-Trade Compliance Order Entry & Execution Order Monitoring Asset Allocation TCA Post-Trade Compliance Fund Oversight Portfolio Recordkeeping Pricing / Valuation Corporate Actions/ Management Trade Monitoring Confirmation and Affirmation Holdings and Transactions Matching Settlement Management Order Communication Consolidate & Normalize Data Performance (Measurement Attribution) Cash Management & Reporting Investment Accounting Custodian Communication Reconciliations Shareholder Services Fund Administration & Accounting Regulatory Reporting Client / Investor Communications 5

6 Shift to Digital Innovation & Data Analytics 1 Empowering the Investment Decision By harnessing the power of Digital Technology and incorporating Data and Analytics techniques into decision-making, Investment Professionals can gain a competitive advantage Emerging digital technologies provide new data points, which can be collected by Investment Professionals to enable data-driven investment decisions Social media - Blogs, Twitter, etc. Fundamental and Quantitative Analysis Supply Chains, Weather patterns By connecting these new data points to each other or existing fundamental analysis, valuable insights can be generated The visualization of these insights and connections will provide Investment Professionals with the opportunity to improve their existing analysis, facilitate better decision making, proactively manage risk and therefore, optimize their investments Continuous exposure modeling and optimization to find financial value Real-time positions, risk and performance Data convergence one location to store (IBOR) Risk tools, scenario analysis, optimizers Computer-assisted decision making Collect Connect Visualize Actionable Insight Digitization & Data Analytics A digitally mature trading operation provides the Apple experience inside the office, integrating and manipulating information into impactful visualizations and insights, which can empower investment decisions 6

7 Shift to Digital Innovation & Data Analytics 2 Operational Flexibility and Standardization Digital Technologies can provide opportunities to reduce costs, leading to optimized operational performance Technological innovation has created new low-cost outsourcing providers available to Asset Managers SaaS and moving IT/operations to lower cost delivery models Lower cost geographies Creating a flexible, digital and fully-integrated end-to-end platform leads to revenue generation through operational alpha Standardize By creating standard Operating Models that utilize these new outsourcing providers, Asset Managers can: Further drive down costs and operational risk Free up mindshare and investment for differentiated offerings Plan Integrate In order to maximize the impact of Digital technology and enable the Operational Flexibility required for future innovation, Asset Managers must focus on: Integration of all systems to create a data fabric for real-time data sharing and reduction of reconciliations Measurement along this data fabric to monetize data throughout the trading lifecycle understanding and reducing costs per trade Continuous improvement Operating Model 7

8 Shift to Digital Innovation & Data Analytics 3 Innovation is changing distribution, sales and communication The deployment of digital technologies has the ability to transform the Client Relationship process in terms of Sales, Communication and Customization, providing bottom-line benefits to both the Client and Asset Manager New Digital Channels mobile, virtual Asset Manager Benefits Client engagement results in better client servicing Lower cost per sale Empowered sales staff Wider differentiated reach Sales Customization Commutation Direct-to-consumers due to lower barriers to entry Lower cost leading to global expansion and global offerings New distribution channels will continue to emerge as wealth and asset owners continue to expand their digital strategies Bi-directional communication model Customized messaging based on client profile Real-time through innovative digital interfaces and delivery methods (client portals) Creation of a single-client fund tailored to client-specific themes and strategies a bespoke fund for each client Enabled by holistic tracking of all client interactions Iterative in nature will adapt as client requirements evolve Breaks down the traditional product distribution model (not an 80/20 mix ) - Requires agile operating model to support Client Benefits Better alignment of investments to need Transparency Enhanced Client experience - Simplified and customized communication Voice is heard Diverse product selection The Digital Asset Manager is delivering customized financial products and financial information to clients however, whenever, and wherever they want 8

9 Connect: John Siciliano 300 Madison Avenue New York, NY T:+1 (646) M:+1 (626) John Siciliano Senior Managing Director Asset Management Strategy PwC s Digital Services 9