The global market for asset management is growing rapidly. According to a report by market research institute Zion, it is expected to reach a value of around $3.5 trillion by 2030, with the strongest growth expected in Europe.

Despite this trend, German asset managers are increasingly lagging behind. They make lower profits than their international competitors and thus, lose significant market shares to foreign banks. The year 2024 will present German companies with new challenges.

Banks must adapt to three trends: investor requirements are changing, regulatory costs will continue to rise and attracting new talent as well as training and developing existing employees is becoming increasingly crucial. The development and use of innovative technologies are increasingly becoming a key differentiator for banks.

Generational shift: Millennial investors require new customer advice
To ensure customer satisfaction, asset managers and asset managers must have a clear understanding of their investors' requirements. In the coming years, the wealth to be managed will gradually shift to millennials - this will require a rethink in classic wealth management.

The Millennial generation will both build up their own wealth and benefit from a wave of inheritances, thus making up a significant portion of the capital invested in the future. In addition to traditional physical meetings, these digital natives will demand new avenues of consultation through automated digital channels available 24/7. Above all, they want to be informed about products and markets. Buzzwords and trends such as gamification, educate your customer, opti-channel contact and phygital cause headaches for most traditional wealth managers.

The question of how these new technologies and channels can be reconciled with the existing consulting approach and infrastructure will be just as crucial as the segmentation of the target groups. Banks will therefore have to find a new balance between personal contact with measurable added value and next-generation technology-based communication and sales channels.

Cost problems of German banks – Fintechs as an opportunity
While the international asset market has overcome the peak of the income crisis, German wealth managers continue to struggle with excessive costs. One problem is the strict regulatory requirements. German financial institutions invest a significant portion of their budgets in projects commissioned by the regulatory authorities. They must be able to deliver comprehensive and complex data on demand.

However, many German financial companies are struggling with outdated operating models that are unable to meet the requirements in a cost- and time-efficient manner. Banks must quickly reinvent wealth management to avoid remaining at today's low profitability levels in the long term. One possibility could be, for example, cooperation with fintechs. Innovative asset managers have already understood that their range of services can be meaningfully supplemented in this way.

Human capital challenge – increasing productivity using Artificial Intelligence (AI)

The right employees are crucial to the success of any financial company. Appropriate human interaction determines customer satisfaction and can provide the decisive competitive advantage. At the same time, he points out that the recruitment and long-term retention of new staff will be among the main challenges for asset managers in the future.

The future generation of workers has not yet experienced a labor market bottleneck and is very demanding. Financial firms will need to be more responsive to their needs to attract talent. But existing staff will also require significant investments. Consultants in particular must improve their skills in dealing with various communication channels, learn the strategic use of technologies such as AI and be able to address and inform new customer segments in a targeted manner.

"Above all, AI offers the opportunity to increase the productivity of existing employees by up to five percent and to improve talent management and the provision of products and services," says Alberto Cuccu, Chief Operating Officer at Objectway.

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