For most of us, it's become normal to take a Uber home from a night out, order things for the apartment on Amazon, Google something on your mind, and then tweet about it.
While technology has become ingrained in our daily lives and embraced by a variety of industries, financial services still has a long way to go. Investment managers need to do a better job of being "visionaries," according to a report published by investment manager SEI Investments, which has $281 billion in assets under management and $470 billion in client assets under administration.
That requires looking beyond the markets, beyond internal processes, and to the "broader currents in our rapidly changing world."
SEI Investments identifies five areas of emerging disruption that asset managers need to pay attention to in order to survive and thrive.
According to the report, "The industry is feeling pressure from the past and the future... and if we aren't already thinking long and hard about this, we need to be."
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'Watsonization'
'Watsonization' refers to to the proliferation of cognitive computing, or systems that seek to emulate human-like thinking.
Cognitive computing systems like IBM's Watson can simulate human thought processes as they process mass amounts of data and recognize patterns, weigh probabilities, and make predictions. The systems use machine learning to organize data and natural language processing to understand human speech.
The technology has moved beyond IBM and is being harnessed by a variety of other companies in areas including health care, travel, retail, financial services, and others. Examples of cognitive computing include predictive analytics, facial recognition technology, and call center chatbots.
As it relates to financial services, robo advising is a form of cognitive computing that is already taking the wealth management industry by storm, and a growing number of hedge fund managers are using machine learning technologies to make and implement investment decisions. According to a study by Deloitte, robo advisor assets under management could reach 7 trillion by 2025.
'Googlization'
We live in an unprecedented era of information overload, where everything from social networks to satellites generate enormous amounts of data every day.
The rise of big data has made data management essential to financial services firms, and firms are looking both internally and externally to make sense of it. Data-centric companies that analyze both structured and unstructured data try to extract competitive knowledge from the huge quantity of information. Firms are increasingly hiring data scientists, and the Harvard Business Review's Tom Davenport called the Chief Data Scientist the sexiest job of the 21st century" in a October 2012 article.
'Amazonization'
Online ecommerce platforms like Amazon have changed the expectations of consumers and reshaped business dynamics, according to the report, and expectations of personalization, transparency and convenience have become the norm.
These online giants are creating competition for traditional players in financial services. Amazon Capital Services already has a lending program for merchants and Alibaba's financial services unit is expanding into banking, investment, insurance and credit card services, and launched its own money market fund in 2013.
Asset managers must accept that they are part of this "competitive cauldron," and could be faced with competition and fee pressure. Barriers to invest in relatively illiquid asset classes are diminishing, and firms need to adapt to shifting consumer demands and expectations.
See the rest of the story at Business Insider