Asset Administrators need to rethink their client engagement through the use of a multi-service digital portal experience. Here are some pointers to steer you in the right direction.
Asset Servicing is a scale game and in a relatively low margin industry, the more Assets under Administration, the more likely the odds of asset servicing firms delivering profitability. This doesn’t bode well for the smaller niche firms, especially those operating in the alternatives industry. These firms will only survive through exceptional client service and relationship management, but there is only so much a traditional approach to client management in the asset servicing industry can go.
Ultimately, these firms need to become more scalable businesses with less people, instead of over relying on the “relationship” with the asset manager. There is hope however for the industry, including niche players, to mitigate against an eroding business model – Digitalization. Custodians, Transfer Agents, Third Party Administrators, Collateral Managers and Investment Management Outsourcers are characterised by ageing systems, processes and business models.
They have developed their business by bolting together antiquated systems and custom developments, to the point where the cost of running these processes is now a very real problem that is percolating through the “system” and into the line of sight of the investment industry, through increasing scrutiny over administrative fees.
Analogous to retail banking, where so-called Challenger Banks are disrupting the established banking brands through platforms that embrace digital thinking and the “API economy”, the asset servicing industry needs to think along similar lines.
There is a real opportunity to de-clutter processes and systems and rethink the asset manager and investor experience. This will drive efficiencies to the customers of asset servicing firms who are increasingly demanding lower fees such that these savings can be passed on to investors through low management charges.
At Kurtosys, we believe that the asset servicing firms need to alter their engagement model with their customers and behave more like platform businesses, as opposed to IT systems providers. This means not only “sorting out the plumbing” but significantly changing the client engagement process through the provision of a unified, multi-service digital portal experience that customers can call on as their personalised venue for the variety of service they have procured.
The firms that will thrive will be the ones who rethink their existing “web portals” at a time where most are coming to end. The next generation of portals will not only provide dynamic aggregated and self serve reporting, but also provide the asset managers with tools to support end investors. Execution and cash management services need to be integrated into these portals through a unified experience so that customers have the feeling they are working with a service driven, well honed platform as opposed to a complex amalgamation of services and people.
The integration of video and educational tools will help managers get more value from their administrative partners and allow these partners to demonstrate more than just being a tail-end service. There has never been a better time for asset servicing firms to reimagine what a “portal” is and how they can leverage technology and know-how from Kurtosys to map a digital vision for the next decade and beyond.
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