Objectway partnered with L’Agefi for the 8th Edition of the Private Management Forum in Paris, dedicated to formers and future private bankers with the main goal to extend their practice, offering a more agile, personalised and sustainable approach.

Innovation & Technology, hand in hand

The asset and wealth management industry are experiencing a major historic shift: from traditional to modern, from conservative to dynamic and from product- and institution-centric to customer-centric. This is happening under the influence of market changes, demographic shifts to next-generation wealth, regulatory pressures, disruptive competitors and, not least – immense and continuing technology innovation.

It would be a cliché to say that innovation is all about change itself, or the wealth managers’ response to new conditions – but this is, indeed, the essence of what often drives and shapes a program of this nature. There are multiple, equally important dimensions and types of innovation, like business model innovation, process innovation, product and service innovation, organisational design, operating model innovation, and more. Each of those has touchpoints and dependencies with the others but addresses specific challenges and opportunities.

Technology often has a dynamic and special place in this complex puzzle of innovations, as a key enabler and facilitator of many innovation areas and serving as their integrating ‘glue’ for broader transformation.

Defining Sustainable Growth within the Wealth and Asset Management sector

The financial sector, unlike manufacturing, energy, agriculture, or transport, does not directly create sustainable growth. It is correct to say that it supports, empowers, stimulates, and facilitates all other sectors through capital allocation.

Within Financial Services, asset and wealth management play a special contributing role because of their investment management capabilities and ability to distribute and manage capital for long-term objectives. Specifically, and impactfully in terms of sustainable growth, the mechanisms of consistent capital and governance support of sustainable industries and companies through investment strategies that identify and target them gives way to relevant financial products for institutional and private clients that are not solely judged by their monetary returns, but specifically on how they will deliver environmental and social benefits.

Innovations through investment are best developed and deployed to drive and accelerate the ‘field’ innovations in sectors where actual sustainable growth is created. For instance, supporting and encouraging investment in energy efficiency or renewables companies can demonstrate real and clear environmental benefits, along with long-term returns for the investing client. There is huge scope in the allocation process for the use of rich data and advanced intelligence that can simulate benefits and measure real outcomes. There is also scope for enhanced client engagement processes and tools to respond to report these to clients who seek confirmation of aligning values and interest from their wealth partners.

As a leading provider of wealth- and asset management solutions, Objectway has extensive experience with hundreds of client institutions in many client segments and geographies, resulting in deep awareness of their goals and needs, as well as the most prevalent market trends. This network shapes new functionalities and features of our products. Core Portfolio Management solution, for instance, has always been very strong in risk analysis and modelling – now we see risk inseparable form ESG criteria and integrate them into our modelling and optimisation functionality. Today we speak of ‘Risk-aware and ESG-aligned portfolio optimisation’ and it is proving to add value and be in demand by client institutions.

In this process it is unthinkable to build and maintain any portfolio without keen and deep customer insight. It is therefore essential to leverage customer engagement tools that interactively capture important information for customer profiling including their sustainability preferences and requirements. Portfolios process attributes to bring these choices to life in rich reporting and analytics.

These capabilities are deployed to encourage customer bi-lateral interactions, and conversations. This is achieved within a strong governance framework that emphasizes transparency, fairness, and individuality. This allows our clients to genuinely demonstrate to clients all the sustainability aspects of their portfolios’ performance. Through ratings and scores, ESG exposure and momentum analysis, and drill-down availability of detailed data, we help clients manage investment behaviours towards achieving their own sustainability objectives.

Driving Successful Innovation

Innovation can be a complex subject yes, especially for large-scale players who have seen a wave of different innovations and technologies, but transition can be seamless. Business transformation has a strong cultural dimension and is only fully realized as a cross-functional, enterprise-wide undertaking and not simply an IT or Operations exercise. Everyone owns a part of the change management process, has a role to contribute to it. Only with such shared ownership and consensus about the innovation goals and outcome expectations, can one overcome blockages and achieve a transition. There will be bumps on the road and inevitable challenges – but those are overcome successfully when the effort is aligned and company-wide.

At the end of the day, in the rapidly changing environment, asset and wealth management are playing a catch-up game, having previously been conservative and reluctant to innovate. Of all innovation trends and dimensions, sustainability has a high priority in the short and medium term. Sustainable innovation can be more successful in the areas of risk-aware and ESG aligned portfolio management, and hybrid, hyper-personalised customer engagement. Whatever an organisation’s priority, successful strategic innovations require coordinated enterprise-wide approach and mutually agreed outcome expectations among all stakeholders.