See the new issue of Briefings magazine, available at newsstands and online.
Sometimes it can take decades for real change to occur, especially when a whole continent is involved. But that wasn’t the case when a seemingly innocent form of e-investing landed on the shores of Asia a couple of years ago.
For decades and right through into the 21st century, the investment landscape here was dominated by professionals advising the middle class and wealthy on investments, and handling many of the transactions. It was a somewhat ironic state of affairs: Online investing was all the buzz in the West, but not in an area spanning from Seoul to Shanghai, a region that has long been considered a technology bastion. A largely personalized service ruled the day.
But that was before Alibaba Group, the Chinese e-commerce giant, catapulted into financial services and its online payment affiliate, Alipay, gained a majority stake of Tianhong Asset Management Co. in February 2015. Together they launched Yu’e Bao, which translates as “leftover treasure,” a reference to converting spare cash into money-market fund holdings. Instead of a phone call or chat with an adviser, all consumers needed was a few mouse clicks to put money into this fund, which offered rates more attractive than most state-run banks.
Eighteen days later, some 2.5 million customers did exactly that—and socked $1 billion away into the fund. And they were just getting started; within a year, 81 million customers poured $90 billion into the fund—easily the fastest growing mutual fund in history. Only three U.S. money-market funds were larger—and they had been around for years.
In some ways, Asia has never quite looked back. Waking up to this disruptive technology, asset and wealth management firms are assuming the high-net-worth crowd will want to get in on the action too, so they’re deploying a combination of digital and human- delivered strategies. Clients include everyone from individual investors to sovereign wealth fund and institutional managers, and while it may take time, it’s likely to be quite a transformation—just look at how big mobile apps and online investing have become for all asset classes in Western markets. As Ryan Stork, chairman of Asia Pacific BlackRock, put it, this is “a journey; some firms are ahead of others.”
But exciting as it is, the journey has one stumbling block, and it’s the kind that technology must always wrestle with— humans. How do you find the talent that has the skills to be both high tech and high touch, especially when the customer base is such a rich group?
Indeed, of all businesses, this is one digital transformation that’s going to take a delicate hand. Tech-savvy talent is clearly a must. But so is the need to understand and advise well in the vast world of finance—and to know how to handhold well-off clients. Rare is the breed of individual who is comfortable with both. The ideal candidate is someone who is comfortable using technology tools for risk management, portfolio evaluation, and asset allocations, as well as able to provide best-in-class consumer experiences, gain new customers, increase loyalty, and grow market share.
In one sense, this kind of talent challenge mirrors the same ones many industries face. Successful digital transformations are not about having the right technology alone; rather, the deciding factor is having the right mix of talent to lead and execute the transformation. Often that talent mix involves some digital expertise recruited from outside the industry, coupled with people within the organization who are deemed “digitally ready”—with eagerness to learn and embrace new ideas. Specific traits include:
- The ability to learn quickly and react to the unexpected
- Critical thinking skills and being comfortable with complexity
- Experimenting and dealing with the discomfort of change
- Scrutinizing problems and making connections so others can understand them
- Work well within highly structured financial service environments
- Comfortable converging capabilities, handling both investment strategies and digital applications
Here in Asia, some financial institutions are already forming teams to identify and train graduate students. It’s a smart move, since students who have digital skills tend to pick careers in technology—not financial services. In the end, don’t be surprised if the most successful financial institutions are the ones that kept an eye on the human element of this business. Indeed, in the land of high net worth, the best-trained teams will be the real game changers—as much as any app.