BigTechs – with their size, brand recognition, distribution capabilities and technology – are already active in the financial services industry and have sufficient motivation to enter the asset management industry. With consumer trust in BigTechs now equal to their trust financial institutions and even ahead of their trust in fund managers, it is interesting to look at what BigTechs can offer. There are 5 big strengths they have in the asset management industry:
- access to big data,
- technological capacity to process and analyze massive amounts of data,
- efficiency/agility to initiate innovative changes,
- extensive knowledge of consumer attitudes and habits
- sales strength through brand loyalty and established trust.
As BigTechs begin to make the jump into the asset management industry, there are four main market entry options to consider: building their own asset management division, white labeling products from other asset managers, merging with/acquiring other asset managers or extending existing collaborations. Each has its own unique advantages and disadvantages, and it is important that traditional asset managers are aware of these as BigTechs move further into the industry. To compete, current players must work to improve digital services and build brand recognition and consumer loyalty. In particular, current asset managers should focus on leveraging technological capabilities to increase efficiency and agility. This includes taking data management to the next level.