FORTUNE FAVORS THE DISRUPTOR

Transcription

1 FORTUNE FAVORS THE DISRUPTOR Playing the digital card in asset management.

2 The financial services industry has long been at the forefront of the digital revolution. Asset management, however, has hardly been touched by digital. But, the trends are changing fast. The time to act is now. India s tryst with digital began in 2010 with the launch of Aadhaar, a biometric identification program. Since then, the industry dynamics, especially in financial services, have changed considerably. Organizations are keen on embracing technology not only to reduce costs and boost operational efficiency, but also to bring in transparency in operations. Other government initiatives such as Pradhan Mantri Jan Dhan Yojana (PMJDY), goods and services tax (GST) and demonetization are giving a further push to digitization. As a result, today s businesses look nothing like they did in the past. 2

3 The Indian asset management industry is undergoing a massive change. It s among the fastest growing in the world. Consider this: The total assets under management (AUM) by Indian asset management companies (AMCs) increased by 32.5 percent to INR22.6 trillion (approximately US$350 billion) in And, this is only set to increase especially on the back of the government s Digital India agenda and favorable demographics. AN ACE UP INDIA S SLEEVE India s gross domestic savings (GDS) as a percentage of gross domestic product (GDP) has remained above 30 percent since National savings in India are expected to reach US$1,272 billion by Corporate investors account for around percent of total AUM in India, while high net worth individuals (HNWIs) and retail investors account for percent and percent, respectively. In Asia Pacific, India is among the top five countries in terms of HNWIs. 3 Investment from outside T15 (top 15) cities is growing significantly. In December 2017, B15 (outside top 15) cities registered a percent growth in total assets over the same period last year. Also, the share of individual assets in the B15 locations increased to percent in December 2017 from percent in December The writing on the wall is clear: India is one of the most lucrative markets for asset managers. To capitalize on the favorable statistics, AMCs need to understand the changes sweeping the Indian ecosystem and place their bets accordingly. 3

4 WINDS OF CHANGE EVER-EVOLVING CUSTOMER EXPECTATIONS Exposed to always-on connectivity and dynamic devices, today s customers demand hyperpersonalized experiences at every step of the journey. MUSHROOMING FINTECH STARTUPS Fintech startups are forging ahead with innovative ideas to bring down costs, improve time to market and enhance customer experiences. ENTRANCE OF GLOBAL PLAYERS Global technology companies, such as Google, Facebook and ebay, as well as large telecom players are considering breaking into the asset management industry. Disruptors with a single product line or/and open low-cost platforms are challenging existing business models. TECHNOLOGY INNOVATION FUELING OPPORTUNITIES Modern IT, such as design thinking, agile, lean engineering, DevOps and operations analytics, is accelerating delivery while increasing the ability to innovate faster without increasing costs significantly. INCREASING FOCUS ON SECURITY Ensuring data privacy is becoming essential for brands with tightening regulations and increasing financial vulnerabilities. These fundamental trends are throwing open huge opportunities for Indian AMCs. But they are laced with obvious challenges, which can be addressed by adopting a structured digital approach. 4

5 BETTING BIG ON DIGITAL As AMCs move toward the next wave of growth, technology will be a key enabler to drive innovation, speed and accuracy, and create differentiation. Successful organizations will be able to align technology with their business needs to achieve greater outcomes. AMCs should consider rethinking and repurposing the organization for a fully digitized economy rather than only looking at using digital for cost optimization. To capitalize on the shifting market demands and gain a sustainable competitive edge, AMCs should adopt appropriate organization-wide digital strategies and business operating models such as: Fully digital platforms Focus on being a low-cost provider with an intuitive digital platform that can offer fully automated, low-touch portfolio management and advice services. Use the latest digital technologies to drive better investment outcomes through increased efficiency and more focused management and asset allocation design, freeing up advisors time to focus more on customer needs. Betterment launched Betterment for Advisors a back-end robo-advisor for financial professionals. The software automates and streamlines the operational side of the business with an automated portfolio, enabling financial advisors to focus on client relationship and business development. 5 5

6 Virtual advisors Leverage next-generation technologies to digitize the client-advisor relationship, providing automated investment portfolio with on-demand access to advisors. Tap the digitalsavvy millennials and HNWIs with digital interactions such as virtual advice, but without eliminating the human touch. White label advisory platforms Purchase or partner with platforms to provide an end-toend solution to independent advisors. Build white label automated advisory platforms to automate back-end operations and achieve lower operating costs. Enable machines to handle complicated investment management tasks, asset allocation and rebalancing. Simplified self-managed platforms Simplify active portfolio management for investors who desire to make their own investment decisions. Add richer features and digital touchpoints to promote a collaborative investment management experience. Use advanced analytics, combined with behavioral analytics, to offer personalized recommendations and create a holistic solution for the customers. As AMCs take the digital route, they should ensure an ecosystem that offers services across technology, processes, skills and data. They should also build a robust cybersecurity program to protect their systems from breaches. At the same time, AMCs should invest in client-centric analytics real-time analytics and visualization to enable greater customer insights and responsiveness. Taking a holistic approach to digital will prepare the ground for sustainable growth and operational excellence. 6

7 Reliance Nippon AMC has been at the forefront of innovation and disruption in the Indian asset management space. The company has introduced innovative products and solutions that have become the industry norm and have been adopted by regulators as a benchmark. E-mandate, Aadhar biometric onboarding, self-service kiosks, linking ATM card and e-commerce to the customer portfolio, digitally tying up with fintech players and a paperless environment within the organization are a few examples where Reliance Nippon is leading the way. These initiatives have helped the company to grow its digital business by 250 percent year-over-year and contributed to more than 35 percent of the retail business from digital channels. 7

8 AUTHORS CHANDRA GUPTA Chief Technology Officer, Reliance Nippon Life Asset Management Limited RISHI AURORA Managing Director Financial Services, Accenture in India REFERENCES 1 asset-management-the-future-is-here/ asset-management-the-future-is-here/ ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at Copyright 2018 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.