Trends

2020 investment management outlook

Crossing boundaries for profitable growth

Seeking growth in an increasingly dynamic and complex industry landscape, investment management firms may need to leave comfort zones behind to explore new or different avenues next year.

 

Key messages:

  1. The pace of mergers and acquisitions (M&A) may pick up over the coming year as investment managers look beyond their core capabilities to achieve top-line growth and extend client service offerings.
  2. To expand into emerging customer segments, leading firms will likely try to resonate culturally with their new customers, deliver through current or newly developed technology, and meet the changing investment expectations, such as ESG (environmental, social, and governance) principles, of these new segments.
  3. Private equity (PE) firms have started adopting alternative data for sourcing deals and conducting due diligence, following hedge fund and long-only managers.
  4. Adopting and using insights from alternative data sets for managing and transforming portfolio companies can be a game changer for PE firms.
  5. In 2020, Deloitte expects leading investment management firms to cross the boundary from traditional cost-efficiency projects into a save-to-transform approach, increasing competitive advantage in the process.

 

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Considerations and potential next steps

What implications could these five trends, collectively, have for payments companies over the next year? And what new stakeholder strategies and actions might be taken in response?

As organizations develop strategies around their 2020 “big bets,” we expect that forward-thinking organizations will also maintain focus on the fundamentals necessary to survive and thrive in the increasingly competitive payments industry:

  • Designing (or redesigning) organizations, processes, and technology around an aligned payments strategy and customer experience; continuing to plan, budget for, and build out their physical and digital infrastructure; maintaining compliance with standards and regulations; and driving greater processing simplification and improved customer engagement.
  • We also see new and incumbent players launching products and services that attract customers to their platforms through creative experiences and competitive pricing. To begin, they may need to make strategic positioning choices on where to compete, what products/services to offer, and how to design their growth models to meet customers’ ever-increasing appetite for innovative payments solutions.
  • Financial inclusion may emerge as one of the drivers behind these strategies, especially as payments providers expand their efforts to service the needs of many and provide a customer experience that delivers ahead of the curve.
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