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Client communications is proving a stumbling block for next-gen client experience

SimCorp, a leading provider of integrated, front-to-back, multi-asset investment management solutions and services to the world’s largest buy-side institutions, today announces the findings of a new buy-side survey, commissioned by SimCorp and conducted by AITE Group, ‘Is client communications the stumbling block for next-gen client experience?’.

With insights from over 20 buy-side firms globally, the survey indicates asset and wealth managers are falling into a critical investment gap in digital transformation, with a majority 65% admitting that their current operations are struggling to keep up with investor needs for more frequent and granular data, available on-demand.

Despite one of the busiest years in buy-side history only just in the rear-view mirror, and with ongoing M&A creating a generic breed of asset and wealth managers with little differentiation between them, it appears the majority of firms are falling into a false economy over investor expectations for client communications. Carried out in Q4 2020, the survey found that while just under half of the firms interviewed were reliant on failing legacy technology within their client communications function, only 22% of asset and wealth managers are bucking the trend and preparing for the future. This includes actively investing in digital transformation, such as digital portals and interactive reporting tools for digital engagement.


Recognizing the link between client communications and client experience

One of the key barriers to investing in digital communications is the difficulty in linking client communications to revenue generation. Often because many firms choose ‘efficiency metrics’ such as time taken to create content (83%) or low error rates (73%) to measure the function. Very few firms judge the effectiveness and contribution of client reporting and communications to actual client retention (14%) and even less so for client wins (5%). This makes it difficult to understand the correlation between client communications and client experience. In stark contrast, of the firms actively investing in next generation portals and on-demand reporting, two thirds recognize competitive advantage, and the ability to retain and attract new investors as a key driver.

Demonstrating the important of client engagement, a Global Head of Reporting of a Tier-1 US based asset manager from the survey comments: "We have been on a journey for the last two years or so to re-imagine the client experience. Some of this is technology investment, some of this is getting the right people in place. However, it's important that any new development involves clients every step of the way. For example, we sought client feedback in beta testing of our digital portal and tried to put clients first in its development. Change is a slow process but over time the idea is to allow clients to self-service."


Consistent client engagement to understand real needs

While participants noted that the number of RFP’s including questions on digital capabilities had increased, of the top barriers to investment, 38% identified cost and creating a business case, as obstacles to investment, while 69% claim their firms’ inactivity stems from a lack of explicit demand. This is both intriguing and concerning, given that only a quarter of firms (27%) carry out regular client surveys. Meanwhile the remaining three quarters of firms deduce lack of demand for newer digital tools, simply through the continuation of traditional PDF report requests, and low usage rates of current legacy tools, such as document repositories.

Phil Lynch, Senior Go-To-Market Strategy Principal, SimCorp comments: “It’s clear that a lack of active client engagement and a reliance on the status quo, together with near-term cost concerns pose a threat to digital innovation in the industry. We know there are distinct benefits of digitalization for the buy side, both within the client communications domain and across the firm. Not least the ability to use behavioral analytics to better understand investors and adapt and respond with tailored offerings. These capabilities give firms a finger on the pulse and enable them to take action that delivers superior client experience. In the end that is what will differentiate firms from the rest of the market. Consequently, those firms that don’t act now, may well lose investors in the future, because they simply don’t have sufficient insight and understanding of their clients’ needs to deliver a differentiated client experience.”


A hybrid future for client communications

Paradoxically, despite a growing investment gap among the buy side today, firms had an altogether different picture of client communications in the future, with 64% envisioning PDF reports giving way to interactive digital communications. While digital portals are acknowledged as the preferred future method of client communications, this number is relatively high, given only a fifth of firms are currently investing in digital interactive portals. It suggests the industry has a significant amount of work ahead to deliver against investor expectations. With such divergent approaches to client communications within the industry today, the survey concludes that in the near term, digital tools and technologies can and should act as a complementary approach to static and traditional methods of reporting, to meet the complete needs of investors.

Hilda Tingle, Global Head of Digital Marketing, BNP Paribas Asset Management, a SimCorp Coric client comments: “In a heavily regulated environment, investment management has always leaned towards prudence and cautiousness, but the pandemic saw asset managers proactively assess what communication to focus on and how. While processes were already slowly moving towards digital, whether automating distribution of reports or upgrading client comms processes with AI technology or multi-device access, some firms have accelerated their digital innovation projects. Re-imagining the client journey to move as seamlessly between the physical and digital world, as the clients themselves do, is the important task that lies ahead. Offering complementary digital and analogue processes, rather than replacing traditional reporting with digital only, will create the right tools and an omnichannel experience, to help firms stay on track and retain satisfied clients.”

Paul Sinthunont, Senior Analyst, AITE Group comments: “The survey suggests a divergence within the industry, not only on how to get to a digital future, but also when. Several front-running firms are acting now in the belief that interactive digital client reporting will be the benchmark, while on the other hand we also see asset managers that take a backseat face a potential stumbling block in improving client experience and differentiating from the rest of the market. With many investors being consumers of on-demand data and at the touch of a button services in the real world, those asset managers waiting for investors to demand change or believing the demand will never materialize, are betting on a risky strategy indeed”.


Press release by SimCorp