Digital Transformation: Agility Needed
For a capital-markets firm to digitally transform itself, agility is needed. Lumbering, bureaucratic organizations will be left behind.
Capital Group, which manages $1.15 trillion, has changed the way it distributes and disseminates information about its flagship American Funds, which include equity and bond mutual funds. Rather than distribute funds through advisors and service accounts through share classes as per standard practice, the Los Angeles-based firm is shifting to a fee-based model where the advisor provides advice as well as follow-up customer service.
“Our brand is no longer front and center,” said Stephen Jenvey, principal architect for sales, marketing and digital at Capital Group. “In order for us to get our message out there we need to look at methodologies typically used to target consumers in the B2C space to influence purchase decisions, without necessarily looking to convert in a traditional B2C way.”
“This is a new approach for us,” Jenvey continued. “Historically we produced a lot of communication materials. We would create literature for both web and print, for our advisors to enable them to share the American Funds Voice, Insights and Viewpoints which would be distributed via wholesalers and our web presence. That’s really changing, as we’re looking for new ways of getting our message out there to investors, advisors and the marketplace at large.”
To be sure, agility — defined as the ability to be quick and graceful — won’t win any customers in itself; rather, it’s what an organization is able to provide by virtue of being agile in an evolving marketplace. In the context of digital transformation, agility enables a company to provide advocacy, focus and transparency.
Within capital markets, initiatives around advocacy and brand loyalty have increased since the global financial crisis of 2008-2009, when cratering markets gave the financial sector a black eye.
As a result of weak customer advocacy — manifested by firms acting more like manufacturers and product producers rather than service providers — and an ensuing erosion of brand loyalty over the past decade, “a lot of banking brands and asset-management brands are feeling particularly vulnerable in regards to new market entrants,” said Matt Hopgood, vice president at Sapient Global Markets and co-head of the firm’s visualization practice
“You have a whole new sense of urgency,” Hopgood explained. “We’re seeing a lot of banks in the client-advocacy space — increasing standalone client portals and mobile platforms, joining up channel platforms, etc. These are all very good things to spend and invest your money on, but the opportunity is broader than that. It should be not just about the competitive and the market gaps that you’re seeking to adjust, but ultimately how you’re positioning your organization for increased and sustainable corporate agility.”
There are three aspects of digital transformation for financial organizations, according to Stephane Dubois, founder and chief executive of market data provider Xignite.
One is to break out business lines into separate pieces that can be reinvented to better compete with startups; two is to create a unique, transformational front-end user experience via mobile and web-based solutions and optimized user interfaces; and three is to create a scalable, low-cost technology stack on the back end that leverages open source software, the cloud, and application program interfaces.
“The next generation of financial organizations will be built on the cloud and on top of APIs — from scratch,” said Dubois. “Firms will be able to create new hedge funds or financial service providers by leveraging existing services offered digitally via APIs…all of that will run in the cloud for a fraction of the cost of traditional finance. The millennial generation will gobble up those services.”
Capital Group used the Adobe digital marketing cloud, which provides a multi-channel experience, in conjunction with other vendors to build a platform that enables omni-channel content distribution. The asset manager has also ensured that they have appropriate change management to support organizational transformation and agility on top of the platform.
“Agility is a big deal,” Jenvey said. “How can you transition an organization which was a more traditional print-centric organization to omni-channel, while still respecting where you need time to market and still acting within the constraints within the capital-markets environment?”
Featured image by chrisgandy/Dollar Photo Club
The increase created a sudden demand for liquid assets that contributed to stress in financial markets.
Initial pricing will generate a net loss for the new exchange on each transaction.
Regulators want to aggregate data across trade repositories.
Bill Street, SSGA's head of EMEA investing, helps clients navigate low rates, negative yields and market volat...
'Big data' can make detecting network breaches simpler, if implemented correctly.