When you say the word ‘innovation', the asset management industry is generally not the first thing that comes to mind. This is a pity because there is today not only a demand but a growing threat due to the lack of innovation in financial services. Sure, there are a few people in the industry making baby-steps towards more innovation, but why aren’t there more of them? Why is the financial service industry not being more technologically innovative to meet customers’ demands and needs? Especially when these customers benefit from innovative solutions in many other aspects of their lives as consumers.
The lack of innovative technology is something which is clearly limiting market opportunities for asset managers and hampering business growth. Introducing more innovation to their businesses would open up new markets to the industry and build new customer bases currently not exploited but which are definitely out there waiting. This is key to the future of asset management – firms in the industry must start to think more strategically and need to adapt their technology to tomorrow’s opportunities. We need to start looking at medium to long-term goals, and not just stare at and cope with today’s challenges.
Obviously, the current issues in terms of regulations in Europe are very real and challenging for asset management firms, but this cannot be the sole focus. We cannot only deal with today, we must look ahead with foresight and I fear not enough people are doing so at the moment.
One problem is that there are just too few software vendors in the industry. For example, there is a high concentration of middle and back office systems in two or three leading vendors (as opposed to fifteen or more in the past), and as a result innovation is stagnating.
More vendors might be a solution, bringing in more competition and a wider choice of innovative solutions for asset managers with which to develop their businesses.
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