October 4, 2019
The asset management environment is constantly evolving. The rise of digital technologies is disrupting the established order and leading to the emergence of new business models. Digital breaks the mold... and completely transcends habits. To the point of becoming a tool to improve the investor experience?
Yes, digital is a key element for an asset management company
Digital is a true revolution that some players have identified and adapted to. Just look at the retail sector with e-commerce. Brands that quickly identified the challenges of digital and embraced this shift are capitalizing on innovation and increasing their revenue. In the world of portfolio management, and particularly in real estate, the situation is quite different. The economic model is, admittedly, profitable. Consequently, out of comfort, few players have embraced digital as a tool for innovation. Yet, digital offers a great opportunity for value creation.
In a study published in 2017, McKinsey estimated that digital could generate 18% to 30% additional operating profit, particularly through improved client experience for asset management companies offering active management. Digital is a real growth opportunity for asset managers. They are aware of these challenges, but few are currently utilizing digital. The sector's transformation requires adaptation. A large number of asset management companies recognize the relevance of using Big Data and digital components in commercial activities, but only a minority are taking action.
However, the time to act is now. We need to look at FinTechs, neobanks, and robo-advisors. Many projects are emerging and chipping away at segments of asset management companies' activities. We are still in the Stone Age in the world of real estate management, yet the threat is real and change is already here.
What is the right answer? A tailor-made digital solution is needed. Beware of "turnkey" offers and the deployment of complex digital tools. For an asset management company, the tool is as important as training employees to embrace digital in their daily work. At Mata Capital, we have people developing new tools designed for investor subscriptions, asset management, and for sourcing and identifying acquisition opportunities. Having in-house expertise allows us to act quickly and precisely in line with our objectives.
Innovation can simplify investors' lives:
Digital innovation can enhance the investor experience. As a tool for innovation, support, and assistance in investment or asset management, digital complements the expertise of our employees.
The investment experience is now much more complex and laborious due to strong regulation (MiFID II Directive, PRIIPS KID, GDPR). Digital can rekindle interest. Data collection and the power of new tools are levers to help investors understand the investment solutions they choose, and to add a playful touch to the entire process.
Fintech innovations also simplify investors' lives (online payment, electronic signature, Blockchain), as the advancements made can then be implemented by asset management companies. Like "building blocks," asset managers can strengthen their value proposition with major innovations from Fintech. Mata Capital, in particular, developed a blockchain platform for real estate funds with Consensys and the notary firm Screeb. This platform offers several major features for investors:
It allows for the maintenance of securities accounts for real estate vehicles via blockchain.
It allows for all AML ("anti-money laundering") and KYC ("know your customer") procedures to be carried out through the platform.
It offers the possibility to track the status of a fund subscription or a "club-deal" operation.
Digital, and particularly digital marketing, are also tools for attracting investors. Young and connected, some investors can be reached through digital channels – such as social media – which prompts teams to rethink their communication model.
Finally, digital is also key to meeting investors' growing demands. Investors increasingly have an "ATAWAD: AnyTime, AnyWhere, AnyDevice" mindset and want to access information whenever they want, wherever they want, on any device. This is a demand that needs to be addressed, and digital is the best response.
Innovation can facilitate real estate asset management
From acquisition due diligence to asset disposal and ongoing management, a significant amount of data and documents are produced by our teams and their partners. Internally, we are developing a solution to consolidate, leverage, and make decisions based on this data. With over a hundred assets under management and a large number of tenants, this forms a gigantic, usable, and utilized information base. Ultimately, this results in better real estate asset management.
The first step is to centralize data and documents to facilitate their retrieval and use for each asset.
Subsequently, the full potential of the data will be leveraged to gain insights into an asset. This data will specifically enable the implementation of internal and external reporting for investors, banks, and shareholders. Information is transferred smoothly and accessibly for all stakeholders.
Producing indicators in an intuitive and modular format – especially for investors and management – allows for quick reactions to market and management fluctuations. Better understanding leads to better anticipation, and that's the key.
As these examples show, digital technology allows for rethinking organization to foster cross-functional collaboration. This requires creating bridges within information systems so that business silos can communicate.
It's important to remember that Big Data, Machine Learning, Blockchain, and Robo-Advisors are merely technologies, serving as tools for professionals to achieve an objective or solve a problem. An algorithm's operation depends on how humans have built it. Digital is a means, not an end in itself.
Sapians, a subsidiary of Mata Capital, is the first digital Multi-Family Office that combines the pragmatism of an investment platform with the expertise of leading family office iVESTA. With its 'Just Focus' offering, its mission is to refocus investment opportunities to support its clients' success.