6 minute read 10 Jan 2020
Server room technician with cable

How intelligent automation can transform wealth and asset management

Authors
Alex Birkin

EY EMEIA Financial Services Consulting Leader and Managing Partner

Focused on creating the world’s leading transformation consultancy, trusted to help EY clients generate long-term value. Passionate about cars. Keen golfer. Husband and father of three.

Debraj Dutta

EY UK Intelligent Automation Leader, Financial Services

Leader in intelligent automation. Advising clients on how to drive cost efficiencies and improvements in service quality through automation.

6 minute read 10 Jan 2020

By combining intelligent automation technologies, wealth and asset managers can address specific issues, and achieve multiple benefits.

For wealth managers, asset managers and asset servicers, intelligent automation provides an opportunity to address current challenges and create a far more efficient, effective, scalable and controllable operating model.

This is important because the good times are ending and fast, due to structural challenges in the wealth and asset management industry. Although the value of assets under management (AUM) globally has been increasing, by about 9% per annum over the past 5 years, the shift towards passives, and the challenge over value for money from active investing, has put pressure on revenues. Operating costs are at an all-time high due to multiple factors – including the regulatory burden and the imperative to innovate to meet evolving customer needs. The market has recognized these challenges, with the share prices of the largest listed asset managers falling markedly last year and valuation multiples are at historic lows.

There is, therefore, a renewed imperative to implement a digital operating model that enables efficient and safe growth. This represents a major change for the industry, which has been relatively slow to embrace digital. Firms will need to apply multiple levers: large scale technology change and rationalization, developing next generation data architectures, and changing business and operating models. Many wealth managers, asset managers and asset servicers continue to explore such options but can become frustrated or be held back by resource constraints, the time required, and the high costs associated with achieving desired benefits.

Intelligent automation: a complementary response

Intelligent automation offers an attractive complementary response, a new strategic capability that augments more traditional levers. It can help firms move the operational efficiency dial quickly and deliver a good return on investment while freeing resources and capacity to embark on strategic programs. Leading wealth managers, asset managers and asset servicers are achieving multiple benefits – not just cost savings, but also capacity creation, risk reduction, improved client experience and enhanced employee engagement, amongst others.

Intelligent automation is a multi-faceted concept. It involves automating end-to-end processes intelligently using the right blend of automation technologies (such as robotic process automation (RPA), digital forms, optical character recognition (OCR) and intelligent character recognition (ICR), business process management (BPM) and workflow, natural language processing (NLP) and machine learning (ML)) to achieve the desired organizational objectives.

Another key aspect of intelligent automation is that all these different automation tools are catalysts for standardization. They should be implemented with a “light touch” lean approach to optimize and streamline processes and gain simplification benefits.

For each tool or solution, the promise is similar: simple, quick configuration to deliver automation benefits quickly – if used correctly. Their real power, however, is realized in combination. Implementing a range of different intelligent automation technologies enables processes to be automated end -to- end with multiplicative benefits.

Potential benefits for all firms

While all types of wealth managers, asset managers and asset servicers can see benefits from intelligent automation, particular segments may have a greater motivation to achieve certain results. For wealth managers, the need to create and sustain a high-quality client experience is vital. Account set-up is a useful example, traditionally involving lots of paper, the provision of the same data by the client multiple times into multiple entry points, and numerous interactions between client and wealth manager. Intelligent automation can dramatically streamline the process and enhance customers’ account set-up experience through a combination of automation, digital forms and potentially OCR.

As well as seeking to provide a quality customer experience, asset managers have a strong motivation to reduce risk in their operating models. In order management, for example, firms may have a core order management platform, but still make extensive use of spreadsheets to implement new strategies quickly – with the accompanying risk arising from off-system processes. Intelligent automation can address this challenge and reduce firms’ risk through the combination of RPA and digital forms.

Another example is compliance guideline coding; reading complex investment management agreements (IMAs) to create investment guidelines is a challenge, and compliance breaches can result in expensive penalties. Intelligent automation can help to reduce the risk of such breaches – through the combination of OCR, NLP, machine learning and RPA to scan, read and extract relevant information from IMAs, and transpose this relevant information into compliance rule coding screens, in an accurate and risk-free way.

Further downstream, asset servicers have a strong motivation to reduce manual processing and cut costs through the use of robotics process automation, for example in cash and stock reconciliations to compare values across two or more spreadsheets or reports, highlighting exceptions or breaks only.

Intelligent automation challenges

Given the potential benefits, it’s no surprise that the EY Wealth and Asset Management Advisory team is working with clients who desire to embark on transformative operational efficiency programs. However, there are challenges to address in delivering intelligent automation successfully and unlocking all potential benefits.

The number one challenge that firms face is identifying a compelling business case and where to start their automation journey. At EY, we have developed a proven framework for identifying the business case in wealth and asset management, where volumes and scale are typically less than in banking and other financial services.

A second key challenge is that successful intelligent automation isn’t just about technology: it needs humans. The real power of intelligent automation does not come just from RPA or other digitization tools by themselves. At EY, we believe in humans plus a virtual workforce: augmenting the power of your human workforce with a set of automation tools is a powerful workforce-multiplier.

When embracing intelligent automation, firms need to think about evolving to new digital ways of working. It’s vital to implement automation using an agile framework, with the iteration of minimum viable products, which can be challenging for firms who have not adopted this approach culturally.

The human context is also vital for successful intelligent automation in other ways. Executive buy-in and the right tone from the top is essential, as is careful planning of change management programs and the provision of training and support to help workforces adapt.

Summary

Intelligent automation can help wealth managers, asset managers and asset servicers overcome the current pressures they face. There are a number of challenges involved in delivering successful intelligent automation programmes. Nevertheless, by combining intelligent automation technologies to address specific issues, firms can achieve multiple benefits, including improving the customer experience, reducing risk and cutting costs. They can look to achieve a more appropriate operating model to meet the challenges of today and tomorrow.

About this article

Authors
Alex Birkin

EY EMEIA Financial Services Consulting Leader and Managing Partner

Focused on creating the world’s leading transformation consultancy, trusted to help EY clients generate long-term value. Passionate about cars. Keen golfer. Husband and father of three.

Debraj Dutta

EY UK Intelligent Automation Leader, Financial Services

Leader in intelligent automation. Advising clients on how to drive cost efficiencies and improvements in service quality through automation.