Sectors
We focus on four highly regulated sectors: asset management and investment funds, financial institutions, healthcare and life sciences and technology, media and telecoms – using our specialist skills to understand your business and the forces at play around it. Read on for our take on the implications of digitalisation in these sectors.
Asset management and investment funds
The Asset Management and Investment Funds sector is moving from being product to client centric and embracing the benefits that digital approaches and technologies can bring.
The digital and data revolution in the asset management industry is pushing traditional asset managers to innovate in order to catch up with agile on-line competitors. Digital technology will allow the industry to create bespoke solutions for clients tailored specifically to their individual needs. Digital transformation will have a deeper impact on the commoditised retail space than on the customised institutional space in the short term. However the demographic changes driving web innovation will be powerful enough to influence investment value chain, competitive landscape and business models in the longer term.
There are a number of factors that will accelerate the pace of implementation of digital innovations in this sector. These include financial pressures driving the need for automation, fees and charges becoming a major differentiator and the rise of passive funds. Client needs are changing with the growing social acceptance of digital innovations and end-investors are becoming more self-directed and demanding about investment returns and client experience. Asset managers will need to diversify their portfolio to counter competition both from new tech entrants and more agile asset managers and this may be achieved through technological acquisitions. Considering how fast technology is moving, those that fail to adapt risk losing a potential advantage in the competitive race to deliver the rarest of returns – alpha. Consequently, most managers are in the process of updating their investment processes and business models in order to accommodate and optimise the growing amount of alternative data.
It is a pivotal time for the asset management industry to help fulfil its clients’ needs with technology whilst simultaneously creating efficiencies and costs savings by digitalising internal processes.
“The extent to which the disruptive forces at play will reshape entrenched industry players is still unknown. With a heavy focus on the move towards a more client led approach, digital leaders in asset management are rethinking their footprint and sourcing strategies for the middle and back offices, rationalising commoditised and low-value activities while keeping talent focused on the highest-value strategic differentiators. The race is on as the industry seeks to develop solutions to legacy industry issues and jostles to find its rightful position among peers in this new digital age.”
- Darren Fox, Partner
Financial institutions
Although the pandemic has accelerated digitalisation across the financial markets, it has been an important focus of this sector for over 10 years now. But as with most business imperatives it comes with many pressures that must be dealt with. From operational, regulatory and customer expectations to broader economic pressures, financial institutions must combine these with the right technology decisions to enable successful change.
Traditional market players are now adopting solutions only previously embraced by market challengers. With this move comes increased scrutiny, formulated globally but with fragmented implementation across the G20 and beyond. Key areas to look out for include over-reliance by financial institutions on BigTech, the adoption of digital tools by regulators and engagement with new digital products such as crypto assets. Financial institutions must balance that with protecting investors and ensuring financial stability to make sure they don’t stifle innovation.
Drawing on our experience of working with the disrupters at grassroots level, we apply the learnings and insights to our work with larger organisations. It means we can combine the small business approach of innovation and flexibility with our ingrained understanding of how major banks and institutions operate. We can help you make small changes with a big impact.
“Digitalisation is at the top of every big bank’s agenda, but innovation can be difficult to deliver quickly in a multi-tiered, regulated business. To really deliver, these institutions need to adopt a disruptor mindset. If they are to keep up with the pace of their digital competitors this might even mean looking at solutions that question their own traditional business models.”
- George Morris, Partner
Healthcare and life sciences
Digital technologies are poised to transform every aspect of the sector – from research and drug discovery to front-line care and business operations. For payors, healthcare and life sciences (HLS) businesses and technology and telecoms companies, digital health provides an opportunity to develop cost-effective, patient-centric products and services. For investors, digital health – and the disruption it brings – offers new opportunities to secure healthy returns. The global digital health market was valued at $111.4bn in 2019 and is expected to reach $510.4bn by 2025 (VynZ Research, 2020).
The pandemic has highlighted the need for increased digitalisation across the sector, including the use of AI to facilitate the rapid identification of new and repurposed treatments, AI diagnostic tools, remote clinical trials, remote monitoring of patients and remote healthcare appointments. While it has helped demonstrate the potential of these technologies, many existing challenges persist. These include establishing appropriate partnerships to execute and implement cutting edge digital health technologies, managing diverse and complex IP rights, implementing data protection compliant systems, controlling cybersecurity risks, ensuring regulatory compliance and managing liability. Data protection and regulatory compliance are likely to be prioritised given the increased focus on health data collection during the pandemic and the convergence of the launch of the EU Medical Devices Regulation and Brexit.
Against this backdrop, digital health is firmly on boardroom agendas, and organisations and investors are willing to spend to make change happen. But seizing digital health opportunities will bring new challenges and risks. Management teams will need to steer their organisations through significant market disruption, while also making confident decisions about how to evolve their business models and protect market share. There will be winners and losers. Whether an organisation sinks or swims in this new era will largely depend on its willingness to adapt.
“Digitalisation presents exciting opportunities to revolutionise the healthcare and life sciences sector, and we’ve been seeing an increase in uptake during the last three years, accelerated in part by the current COVID-19 restrictions. As with any technological development, there are legal challenges that need to be addressed, from data protection and regulatory compliance, intellectual property, product liability, talent, funding, collaborations, corporate matters and tax.”
- Michael Gavey, Partner
Technology, media and telecoms
The Covid crisis has taught us how vital technology is to both our workplace and our personal lives. It has massively accelerated digital transformation across most industries.
Companies within the technology, media and telecoms (TMT) sector will be the beneficiaries of that trend but they will also be subject to it. Whether creating offerings for B2B, B2C or B2G, TMT organisations will be even more active in their markets developing new products and technologies and facing new data or IP related legal challenges.
Some parts of the TMT sector have been doing what might be regarded as digitalisation for longer and more extensively than others. For example, we have been helping some of our clients move data and applications to the cloud for many years now. Cloud computing is not new. It’s been around for decades in one form or another and TMT companies have generally been faster to adopt these newer technologies and technology driven processes than other sectors.
But why? From a regulatory perspective, the sector has had to contend with less regulation than others, so it’s been less constrained in adopting innovations such as cloud computing or AI. TMT businesses have been able to push harder and faster for digitalisation. That said there is still a growing wealth of opportunities for those in the fast-moving tech space to embrace. And for those with thin margins, there is a need to move faster, make investments and transform internal systems to stay competitive and to grow.
Significant technological developments are now encouraging that to happen. Blockchain, AI, the roll out of 5g, IoT and big data analytics will enable a myriad of new products and services. Greater connectivity and automation of vehicles, manufacturing and homes and cities are just a few of those.
“Digital transformation has been a topic that has loomed on the horizon for some time. But now I believe we are at a tipping point where the growing maturity of advanced digital technologies is coming together with a much greater appreciation amongst business and consumers of how they can be deployed to transform how we live our lives and work. Alongside that governments, regulators and businesses will need to wrestle with a number of difficult but exciting challenges. Our focus on just four sectors TMT, Financial Services, Healthcare and Life Sciences and Asset Management and Investment Funds and our expertise of the intersections of these sectors allows us to fully appreciate the transformational impact of technology across all these sectors that is both the present and the future.”
- Alex Brown, Partner
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