A Courageous New World: What Future Holds for Asset Management?

Science and technology have always played an important role in the advancement of the growing world. In the business world, like ours dealing with Asset Management, technology has the potential to transform the processes, operations and systems creating something new every time to provide future generation a new vision to accomplish their dreams in the way they want making it simpler and better in every prospect.    

Now the question that arises is - What is the future of Asset Management? Next will make the question in our country's prospect that will be - What will be the future of Asset Management in India? How can business people turn Asset Management into more success?    

Forecasts are never easy to make and deliver, especially in the business world where predictions .are mere volatile global environment's polity. But majorly have the essence of growth and development in the business due to the working and demand of the product and its great achievability; this makes the business prosperous and successful.    

The concern of Asset Management and its future will grab the attention and importance of the management for which it is used and how it is used.    

There are several remarkable points that are to be remembered and honored about the Asset management which makes it possible to achieve unlimited growth and success.

Key points about Asset Management

Thorough knowledge and learning of Asset Management are important for people who are especially involved with any interest or responsibility for physical or other assets for their decision making, planning, risk management, resourcing, operations, technical services, information support, maintenance budgeting, quality management or organizational development.  

Through proper knowledge and training, the delegates will become familiar with asset management methodologies and practices that are internationally recognized.

They can identify and manage the expectation of stakeholders in respect of asset management. Along with the available structured approaches and improvement of return on assets.

There will be a clear understanding of the asset management terminology and its usage, practices, activities, and methodologies.

More about the Asset Management Industry

The Asset Management Industry is standing on the edge of several fundamental shifts that are involved in shaping the future of the industry.  

India has the highest expense ratio in the world. It is unavoidable for AMC's to reduce the cost investment and expense ratio to move it downwards while in search of more investors.  

It is important for Indian AMCs to hold the technology and its software to be on the drive for their innovation, speed, and accuracy. Many fund houses have been adopting a hybrid model that holds the quantitative tools to supplement their existing fund management and research expertise and improves scales.  

To bring transparency in operations, drive cost and operational efficiency, digitization of pre and post-trade functions are also implemented.  

The unknown growth in the number of new investors is developing a drawback for traditional operations, advisory and distribution models; further making it an opportunity for CTOs embark complete digitization.  

By holding the APIs and moving some of the processes to the cloud, the AMCs can build future applications faster with cost-effective prices, solving the issues of compliance, risk management, and product innovation.

Data Analysis of Asset Management

• Data analyzed by The Association of Mutual Funds in India (AMFI) in June 2019, it has many facts to unveil:
  - The Average of Asset Under Management (AAUM) for the month of June 2019 stood at INR.25,81,397 crore.
  - Total AUM by the Indian AMCs stood to be INR.24,25,040 crore.  
  - The AUM has grown from INR.9.75 trillion as on June 30, 2014, to INR.24.25 trillion as on June 30, 2019, i.e., about a 2.5-fold increase in a span of 5 years.
• Overall, the AUM has grown INR.5.83 trillion as on June 30, 2009, to INR.24.25 trillion as on June 30, 2019, i.e., about more than a 4-fold increase in a span of 10 years.  
• In 2007, the value AUM worldwide amounted to 48.2 trillion U.S. dollars that have grown to 79.2 trillion U.S. dollars as per the year 2017.  
• There is a return and growth of AUM as a percentage of net revenues fall from 36% posted in 2018 to 28% - 33% in 2023.
• There is a market correction which shows the slow recovery, margins could drop from the range of 25% - 28% by 2023. That would mean a fall of nearly 1/3rd by 2023.

Asset Management: A Game Changer

Daily changing market and demographics will push asset management to become the center stage. As banks and insurers will get regularized for their abandonment of propriety investing and other simultaneous businesses. The assets age, retirement, and health will appear to be the critical issues to which asset management will be the only handler.  

This way asset managers will automatically become important in capital raising for urbanization and cross border trade and to diversify the huge pool of assets.  

The buy-side industry is facing changes that will put a considerate impact on the business model in the coming years. According to the officials, adapting to the regulatory environment, low-interest rate, and pressure on commissions are the largest factors as the global environment.  

The main avenues that are being investigated for clients and strategies are diversification and cooperation strategies, retail distribution, client knowledge and environment, social and corporate governance (ESG) investing.  

Operational strategies will include regulatory requirements, need client's needs and cost pressure largely as they will enhance quality and flexibility.  

The new and digital technologies are considered to be a top priority by 84% of the upcoming market for asset management and tracking. Big data, Robo-advisers, blockchain, process automation, and artificial intelligence are the game changers with respect to technology.

Cloud-based Asset Management Solution

Asset Management Solution is a cloud-based solution that integrates with other applications in respect of any feature and prospect of any update.

The cloud-based asset management software uses encryption to store, process and access data online.

The asset management solution on the cloud is more flexible and up to date. Keeping data online makes the process easier for the user to view updates immediately instead of manual update across various devices.  

Cloud-based asset management solution makes your decision making quick and faster for better solution making. Moreover, to make it easy to use and fast to save time and money across the organization.

Importance and Benefits of Asset Management

Following are a few reasons why businesses should be concerned about asset management:

• Keep Track of all assets
  The process makes it easy for an organization to keep a track on their assets either liquid or fixed. They will know the location of the asset, how they put in use, and respective changes made to them. Hence, recovery of assets can be done more efficiently, leading to higher returns.
• Accuracy of Amortization rates
  The regular check of assets ensures you with the financial statements associated with them to keep them updated.  
• Manage risks
  Asset Management identifies the risk and manages it. As they arise from utilization and ownership of certain assets. Anyhow the organization will be prepared to counter the risk if occurs any.  
• Removes Ghost Assets
  The lost, damage, or stealing of assets may occur and still, the assets are recorded in the record book. By strategic asset management organizations will come to know about the lost and thus the record can be removed from the book.  
• Improved Acquisition
  Keeping track of assets throughout the lifecycle can help the organization in improving their technique of acquiring and using assets.  
• Improved Compliance
  The comprehensive reports are required by government agencies, non-profit organizations, and companies on how they acquire, utilize and dispose of their assets. Through asset management, the organizations can compile their reports at the end of the financial year, and they can easily access all the required information.

Conclusion

In conclusion, three major ideas are emerging out which are aimed to identify main trends that will shape the asset management landscape by 2025.

Large asset managers are largely diversified, that shows unresistant and multi-sector approach to investment. Whereas small management firms are in a good position as they are able to make most of the unique propositions.

Organizations lying in between these two are more open to upcoming challenges, as they are unable to give unique propositions and cannot afford to reduce their commissions either.

The potential to make most of the new technologies and promote highly qualified experts are the major factors for success and implementation of a unique value proposition.

There is a complete need of knowing the clients better. This can be supported by digital tools and using client databases that will help in identifying the client better.

Every asset management organization must develop a better solution for highly competitive and continually changing commercial context.