For an industry known for embracing – and often depending upon – technology, it seems surprising that asset managers have yet to take full advantage of the huge opportunities presented by online distribution and more specifically, mobile investment apps.
Indeed, a new report from CoreData Research finds app usage for investment and trading still in its infancy, with just 14% and 12% of investors, respectively, using apps for either of these two activities (investing being a more buy and hold exercise and trading more frequent transacting).
More surprisingly, the generation seemingly at the forefront of technological advances – millennials – is slow to the game, with less than 10% of this demographic using trading or investment apps.
So with some investors seemingly wary of mobile financial apps, the challenge of converting investment technophobes into investment technocrats presents a huge opportunity for the asset management industry and one in which they ignore at their peril.
With the tech race very much underway, with the likes of Google, Amazon and Apple already making inroads into the space, asset managers need to get their skates on if they are to steal a lead on these corporate giants. And those offering a well-structured and simplified mobile investment offering will be best positioned.
If asset managers are to take pole position in the tech race, they need to embrace the world of social media – an avenue yet to be fully explored by the industry. And with 37% of investors in CoreData’s research stating that Facebook represents the best social media platform for asset managers, Mark Zuckerberg’s company could offer a path to riches. Facebook has developed a messenger app allowing people to send money to one another and utilising this functionality of the social media giant could be an attractive proposition for asset managers looking to make a dent in the mobile investment space.
And the potential rewards on offer for those making inroads in the space are considerable. Goldman Sachs has estimates US$4.7 trillion in revenue could be up for grabs as technology makes a play on financial services such as lending, borrowing, payments and investing.
Key to getting ahead in the tech race will be the ability to offer a secure and safe online experience. This is especially important in the wake of the cyberattacks that have hit the likes of JPMorgan and Citigroup and, more recently in the Telecoms space, Talk Talk.
Such incidents have pushed cybercrime to the forefront of nervy investor minds and underscored the need for asset managers to provide secure and robust mobile offerings. CoreData research reveals 11% of investors cite cyber-security concerns the number one reason for not embracing investment and trading apps more widely.
But offering innovative and secure mobile investment apps, perhaps through the use of social media, will not alone be enough to win the tech race. Asset managers must also tailor their offerings to a more financially literate investor.
Technological developments have created a revolution in information technology, with free news channels giving rise to a more savvy and informed investor. Millennials, in particular, have embraced such delivery channels and these younger investors have an increased desire to do things autonomously.
This creates both a threat and opportunity for asset managers and securing the custom of this demographic imbued with the so-called “arrogance of youth” could prove a deciding factor in the wider tech race.
The ability to offer a simple and streamlined mobile offering will go some way to determining the tech winners and losers.
CoreData’s research reveals 68% of those using investment apps do so because of their simplicity. Investors already bogged down by an avalanche of online news and information portals will be turned off by overly-complex and cumbersome mobile offerings.
Technology has disrupted many aspects of the financial industry, with the adviser market seeing the rise of robo-advisers and the U.S. motor insurance market witnessing the emergence of “Pay As You Drive” technology where customers can take ownership of price control via a smartphone app.
But despite its inexorable rise, it appears that technology will not suppress investor appetite for personal contact. The human factor still holds great sway with investors. A positive for perpetually ‘under-the-kosh’ financial advisers.
Despite the potential boon let’s not dismiss the traditional, perhaps technology is to be seen as supplementary rather than a complete replacement for many as CoreData’s research suggests personal contact remains a priority when seeking professional advice, with 70% of respondents looking to advisers or wealth managers they have met.
So it seems that – for now – a large portion of clients still prefer to look at the whites (reds – as we enter the pre-Christmas silly season!) of their advisers’ eyes rather than the bright lights of their mobile apps.