The Shifting Transformations of Digitalisation in Asset Management


Why embracing these changes is now a necessity, not an option

By Julien De Mayer, fundcraft Founder & CEO

The asset servicing industry in Luxembourg is undergoing a transformative shift, driven by the relentless pace of digitalisation and an increasingly complex market environment. The recent EY Luxembourg Industry Benchmark 2024 report on the “Impact of Digital Technologies on Asset Servicers” paints a vivid picture of this evolution. It shows an industry at the cusp of significant change, where digital maturity has leaped from “Basic” to “Advanced” within a span of just a few years.

The Current Marketplace

Luxembourg, a pivotal hub for investment funds, is facing intensified pressures due to economic and regulatory demands. The EY report highlights that 91% of asset servicers are either extremely or somewhat confident in their ability to adapt to the rapid adoption of AI technologies. Despite this optimism, the path to digitalisation is fraught with challenges—73% of asset servicers are struggling with non-standardised processes and a significant digital divide remains in fully harnessing technological advancements.

The Rise of Digitalisation

The asset servicing sector’s digital maturity has notably advanced, with a shift from an error-driven and firefighting digitalisation strategy in 2022 to 52% of asset servicers now aligning their digital strategy with their company’s overall plan, and increasingly investing in AI, data platforms, and automation technologies. The shift from a “Basic” digital maturity level with a score of 1.6/5 in 2022 to an “Advanced” level at 2.3/5 in 2024 underscores a proactive embrace of digital solutions. This shift has resulted in 67% of asset servicers successfully digitalising half or more of their operations and 70% focusing all decisions, actions, and strategies around enhancing customer centricity — a significant leap in improving client interactions and operational efficiencies.

Challenges in the Digital Landscape

However, digital transformation is not without its hurdles. Asset servicers still face significant challenges such as the integration of legacy systems with new technologies, the standardisation of data flows, and the adoption of digital platforms by clients. Additionally, the lack of digital sophistication in some areas means that not all firms are currently reaping the substantial cost and service benefits that digitalisation promises.

fundcraft’s Strategic Role

At fundcraft, we understand that to thrive in this evolving landscape, asset management firms need robust, innovative technological solutions that not only streamline operations but also enhance customer engagement and compliance. We provide centralised digital fund operations as a cure to the unique challenges faced by asset servicers:

  • Integration and Standardisation: The top digital challenge reported by 73% of asset servicers is the lack of standardisation across data flows and systems, which is preventing operational efficiency gains. Our platform is designed to seamlessly integrate with existing systems, providing a unified approach to managing data flows and operational processes on one platform. This helps in eliminating silos and enables the standardisation across systems.
  • Data Platform Modernisation: Year-on-year data platform modernisation consistently emerges as the most significant emerging technology for the industry due to its foundational role in business processes, including producing quality data, which is critical to firms wanting to adopt AI (61% planning adoption in the next two to five years). Our state-of-the art cloud-native platform provides a centralised single source of truth providing quality data ready for leveraging AI.
  • Client-Centric Solutions: Recognising that 78% of asset servicers believe their clients view them positively in terms of customer centricity, fundcraft focuses on elevating this experience. We leverage advanced technologies to offer personalised client experiences and intuitive self-service portals that meet the evolving demands of investors.
  • Increasing Industry Collaboration: 70% of asset servicers have collaborated with fintech partners to enhance digital strategies indicating a shift towards greater ecosystem co-operation. This trend is supported by our open, API platform which enables multiple stakeholders in the value chain (lawyers, bankers, auditors, accountants, depositaries) to collaborate effectively on one platform.
  • Operational Efficiency: With the industry emphasising operational efficiency to handle regulatory and economic pressures, our solution provides end to end automation to streamline operations and reduce manual overhead, thus allowing firms to focus on core activities and strategic growth.
  • Future Proofing through Innovation: As digital investment continues to rise, with over half of the firms allocating up to 5% of their revenue to digital initiatives, fundcraft is at the forefront of developing innovative products for future challenges and opportunities.

The asset servicing landscape is undoubtedly competitive and complex. Yet, with challenges come opportunities—opportunities for innovation, improvement, and redefinition of service models.

With a digital first mindset, a product roadmap to incorporate the latest digital improvements, automated processes, and a unified platform, fundcraft would likely fall in the ‘Disruptive’ digital maturity level according to EY’s requirements. With its disruptive platform, fundcraft is committed to partnering with asset management firms to navigate this digital revolution, ensuring they are not only prepared to meet the challenges of today but are also equipped to seize the opportunities of tomorrow.

Embracing digital transformation is no longer an option but a necessity. Get in touch with us today to see how fundcraft is leveraging the power of digitalisation to create a more efficient, client-centric, and resilient asset management industry.