Digital Assets Report


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Embracing disruption in the asset management industry

The asset management industry is one of many industries in the middle of a digital disruption. It can’t be stopped and the industry needs to adapt. 

I have worked with my team at Northern Trust on how we respond to changes in our business environment, and more importantly, how we help our clients respond. More than anything else, creating a focused technological operational strategy is critical. The right strategy merges pre-existing work and tools with things specifically designed to meet today’s digital landscape. We need to focus our approach rather than initiate a wholesale replacement of products and strategies.

I recently joined a panel at the NICSA Strategic Leadership Forum to discuss these issues. The conversation helped clarify what’s at stake. Here are three important trends in this area I discussed during the event.

Partnerships Are Key

Short-sighted institutions sometimes react to industry disrupters in a defensive way, seeing the future of the industry as a battle between an “old guard” and new companies. This is wrong. Asset managers should build and retain relationships with disruptors. 
We have consulted with robotics labs and robo-advisories. These relationships are mutually beneficial, allowing for smaller companies to use large datasets and the resources of a large organisation. Asset managers gain access to leading-edge thinking and observations that can help inform changes to how we do business. Start-up firms can bring a new energy to traditional asset management firms, which is appealing when trying to attract new clients.
Bigger institutions sometimes incubate startups and disruptors in house, while smaller companies may lean more into partnerships to reduce implementation costs. 

Embrace the Disruption

The sooner asset managers embrace the coming wave of digital disruption, the better. A tradition-bound mindset when it comes to technology is no longer adequate. Banks need to thoroughly understand the technology they use and how it is being built. 
At Northern Trust, this has meant creating a Fund Accounting “lab”, where we combine business and technology innovations. In the lab, we reimagine how we work with each other and with clients. We can now create solutions in real-time, seeing how new technologies can benefit clients. 

Changing Demographics of Investors

It is increasingly important to look to the next generation of investors – millennials who are very conscious of disruption. 
As millennials build wealth, we will see a mix of asset management tools and access to direct investments by millennials. The millennial generation expects asset managers and banks to provide tools such as robo-advising along with unparalleled speed and security, as promised by such innovations as blockchain technology and predictive analytics. 
Technological disruption isn’t going away. Smart asset managers will embrace change and implement processes that allow them to be agile in how they respond and adapt.

© 2017 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale investors only and should not be relied upon by retail clients or investors. For legal and regulatory information about our offices and legal entities, visit The following information is provided to comply with local disclosure requirements: The Northern Trust Company, London Branch; Northern Trust Global Services Limited; Northern Trust Global Investments Limited; Northern Trust Securities LLP. The following information is provided to comply with Article 9(a) of The Central Bank of the UAE’s Board of Directors Resolution No 57/3/1996 Regarding the Regulation for Representative Offices: Northern Trust Global Services Limited, Abu Dhabi Representative Office. The Northern Trust Company of Saudi Arabia – a Saudi closed joint stock company – Capital SAR 52 million. Licensed by the Capital Market Authority –License No. 12163-26 – C.R: 1010366439. Northern Trust Global Services Limited Luxembourg Branch, 6 rue Lou Hemmer, L-1748 Senningerberg, Grand-Duché de Luxembourg, Succursale d’une société de droit étranger RCS B129936. Northern Trust Luxembourg Management Company S.A., 6 rue Lou Hemmer, L-1748 Senningerberg, Grand-Duché de Luxembourg, Société anonyme RCS B99167. Northern Trust (Guernsey) Limited (2651)/Northern Trust Fiduciary Services (Guernsey) Limited (29806)/Northern Trust International Fund Administration Services (Guernsey) Limited (15532) Registered Office: Trafalgar Court Les Banques, St Peter Port, Guernsey GY1 3DA.

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