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EY Luxembourg is proud to announce the release of its latest study, "The Customer Experience within the Asset Servicing Industry: What Asset Managers Expect." This comprehensive research provides valuable insights into the evolving relationship between asset servicers and asset managers, highlighting the key challenges and opportunities in delivering superior customer experiences.
Asset servicers and asset managers operate in a landscape marked by significant challenges driven by shifting customer needs and priorities. Today, asset managers demand more value for their money, expecting superior services at competitive prices. This shift has heightened expectations, compelling asset servicers to innovate and enhance their offerings continually. However, delivering value for money is no small feat, especially in an environment where cost pressures are mounting, particularly from private equity investors, and the need for operational efficiency is paramount.
Compounding these challenges is a deteriorating macroeconomic climate, which has forced many businesses to make difficult decisions to ensure their survival. This often involves cost-cutting measures that can inadvertently erode the customer experience. As businesses tighten their belts, the quality of service may suffer, leading to dissatisfaction among clients who are already demanding more for less. The delicate balance between maintaining high service standards and managing costs is becoming increasingly precarious.
About the research
Recognizing the evolving landscape and challenges faced by asset servicers and managers, EY conducted a study to understand their changing relationship. By viewing asset managers as customers, the study aimed to better understand their needs and expectations, fostering a win/win scenario to enhance service delivery and customer satisfaction.
The study primarily intends to assist the asset servicer C-suite in identifying a starting point for their customer journey. It included responses from 21 asset managers and identified 25 asset servicers, providing a comprehensive view of the current state of customer experience in the asset management industry within Luxembourg. The study consisted of a quantitative survey comprising 49 questions, followed by qualitative roundtables with asset managers to deep dive into the responses.
Luxembourg’s unique position
Luxembourg holds a unique position in the global financial landscape. Being the second largest fund center worldwide, Luxembourg attracts a broad range of both asset managers and asset servicers. The country’s strategic location, robust regulatory framework, and commitment to innovation make it a preferred domicile for investment funds and a gateway for asset servicers looking to expand their reach across Europe.
Key findings of the study
Evolving expectations
Asset managers are demanding more value for their money, expecting superior services at competitive prices. This heightened expectation compels asset servicers to innovate continually.
Customer satisfaction concerns
Client satisfaction appears to be a significant concern within the asset management industry. Low recommendation rates reflect this, with only 22% of multi-asset managers, 29% of managers with banking captives, and 20% of pure players willing to recommend their asset servicers.
Low NPS scores
The Net Promoter Score (NPS) for asset servicers varies, with administrators scoring a moderate 15, legal and reporting services facing significant dissatisfaction with a score of -20, and depositaries showing better customer satisfaction with a score of 45. As per the calculation, negative NPS scores indicate Detractors, while positive NPS scores indicate Promoters, on a scale of -100 to +100.
Moderate frequency in desire to change providers
Several asset managers frequently consider changing their service providers, especially for legal and reporting services (60% for pure players). Despite this, they often remain with their current providers due to factors like familiarity, fear of change, and high transition costs.
Perception gap
There is a significant disconnect between asset servicers' self-perception and their clients' experiences. While 48% of asset servicers believe their customer service level is "high," the low recommendation rates and frequent consideration of switching providers suggest otherwise.
Top impediments to loyalty
The main impediments to loyalty are low quality of customer service, poor customer experience, and inadequate digital capabilities. Common complaints include lack of follow-up, slow responsiveness, and fragmented systems.
Norman Finster, EY Luxembourg Partner, Alternatives Consulting Leader, commented, "Our study reveals critical insights that asset servicers and managers must consider to navigate the evolving landscape effectively together. By addressing these challenges head-on, asset servicers can better meet the needs of their clients and secure their position in the market."
Karen Rakotozafy, EY Luxembourg Senior Manager, Business Consulting, added, "We are committed to working closely with asset servicers and managers to unlock value through enhanced client experiences. Our goal is to help firms build stronger client relationships and boost retention."
To download the complete report, please click here.