A clear view of a new year suggests it’s ‘change as usual’ for 2023, with no let-up in sight for the amount of transformative change faced by the asset management industry. Here are our key predictions of what to focus on to see you through:
- Continued pressure on revenues, cost control and efficiency, will keep end-to-end business models at the forefront of CEOs’ minds. This is likely to manifest itself in different ways, depending on the context and business profile of a given firm. Optimising the front to back model, reducing friction and inefficiency as well as introducing third party service providers into a common platform (front to back) remains a medium strategy to protect profitability for many firms.
- 2023 is also likely to see firms stand back and challenge the use and value add of numerous analytical solutions and data costs in their business model, which in the past may not have faced such scrutiny and need for accountability.
- New technology entrants and cloud-based solution providers offer more cost effective and flexible alternatives to trade lifecycle, data consolidation and client/regulatory reporting needs.
- We are also seeing greater opportunities and use cases to bring distributed ledger technologies (DLT) into the value chain – whether that’s smart contracts and settlement or providing opportunities to tokenise investment in popular, and profitable, private asset classes.
- In terms of revenue growth and retention, many firms are investing in their end-to-end digital client experience and associated business functions. This is an area where a siloed approach does not work and there continues to be much to do deliver the type of interactions and flexibility that clients and their advisors expect in today’s world.
- All of this is, of course, on top of regulatory change and reporting demands – the gift that keeps on giving – where for instance, the surprise LDI market ‘stress testing’ during Q4 2022 will see heightened focus and new rules and transparency requirements coming into force.
- And a common challenge which touches on all of the above is data – the life blood of any asset manager’s operating model. But, while technology solutions clearly have their part to play, it is also about having the right end-to-end model and culture, both internally and with strategic partners.
To meet all these challenges and more, in 2023 Davies will also continue to grow, building out our scale and capabilities in the areas and locations where clients most need advice and execution delivery support. Whatever this year brings, we look forward to working with you in exciting times!
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