The next wave of digital disruption in the asset management business will come about as the result of the industry's lack of innovation and long-term underperformance.
That's the view of
Moody's Investors Service in a report that sees technological disruption coming in the form of innovations in distribution through better client contact, relevance, identification, customization and retention. As a low-capital and high-margin business, asset management is an attractive target to new entrants, Moody's said.
"Large U.S. technology firms are often cited as leading candidates to enter asset management.
Amazon,
Google,
Apple and
Facebook have an edge in distribution through their mindshare, lifeshare, datasets, advanced analytics and predictive modeling skills in combination with their ability to target users," said Stephen Tu, a Moody's analyst.
Popular consumer-facing technology companies have strong distribution channels and deep knowledge of their clients, which provides a clear advantage over traditional asset managers in establishing relevance with consumers of financial investment products, the report said.
(
More:
Advisers envision a disrupted advice industry if Amazon shows up)
The largest companies have ingrained themselves into the daily lives of an increasingly technology-oriented consumer base by locking consumers into their ecosystems early on, and incentivizing consumers to remain brand loyal for extended periods of time, it said.
Since the asset management business is growing slowly, it is unlikely that the large technology companies will enter the industry solely for fee income, Mr. Tu said.
"Their entrance is more likely as a complementary service to their main business, which can facilitate the collection of even more detailed and differentiated consumer behavior data and client stickiness into their ecosystem," he said.
