Why Mass Customization is the Future of Asset Management

By Philippe A. Naegeli, Co-Founder and CEO, GenTwo

We are living in a made-to-order world, or so it would seem. Want to build your own computer? Go to Dell's website. Your own car? Try BMW's online configurator. Your own sneaker? Nike By You (formerly NikeID) has you covered.

But are these really fully customized and personalized products? In truth, the platforms just mentioned require you to choose from pre-arranged options given to you by a single vendor.

So do most such platforms. That's great, but it's also pseudo-customization, not the real deal. Real customization means building products from scratch exactly to the consumer's specifications. Thanks to new technologies like AI and 3D printing, this too is becoming possible in consumer goods.

Hyper-Personalized Inputs

Good examples include ASICS’ recently announced Personalization Studio (3D-printed insoles based on a foot scan) or Yuniku by Hoya (3D-printed eyewear based on a face scan).

Because their products are based on unique, hyper-personalized inputs – not choices from a set of drop-down menus – these platforms can be said to offer true mass customization. They are also the future.

 
Real customization means building products from scratch. (Image: GenTwo)

The Shape of Things to Come

We can see a similar trend in the world of asset management. Today we already have a lot of pseudo-customization. Personalized ETF providers like Findependent and direct indexing services like the one offered by Vanguard represent real innovations and are great for investors.

But creating these products involves choosing from menu cards provided by the platform. For truly customized asset management investors should be able to specify a product on any asset or strategy they desire – not just the traditional, bankable assets that are the bread and butter of most pseudo-customization platforms.

For their part asset managers need to be able to offer such hyper-personalized products to their clients and do so at a price point that makes the product profitable for them.

The Future is Now

For a number of reasons, I believe a move to mass customization in asset management is inevitable. First, hyper-personalization is not just a «nice-to-have» for investors. It will increasingly be seen as a «must have» as investors look to invest in alignment with their beliefs and reap the benefits of truly broad diversification without being constrained by the offerings of any single provider.

Second, there are some 78 trillion dollars of non-bankable assets currently held by wealth management clients but not on bank or asset managers' books. True customization would make these assets bankable and investible, unlocking enormous wealth potential.

This represents a huge impetus for continued personalization in our industry.

78 Trillion Dollars of Non-Bankable Assets

Third, mass customization is advantageous for asset managers themselves. It allows them to retain assets, keep clients satisfied, and stay ahead of the competition. This will drive demand for mass customization capabilities on the producer side.

The good news is that they do not have to wait any longer. At GenTwo, our vision is to provide our clients the technology and tools they need to turn any asset or investment idea into a bankable security in just a few clicks. This is a process we call «Assetization», and which my partner Patrick Loepfe and I have described in detail in our book of the same name.

Getting Ahead of the Trend

With our platform, banks and asset managers can offer true customization to their clients. In fact, they already do: since our founding in 2018 our clients have created over 1,400 products with a volume exceeding 5 billion dollars.

Other providers are sure to follow our lead. In the future, creating a fully customized financial product will be as easy as booking a flight.

Asset Managers who want to get ahead of this trend should probably start planning their trip to the future now. Those who can offer mass customization will be able to attract more clients, broaden their product shelves and increase their AuM.

Those who don't risk falling by the wayside.

• Interested in learning more about GenTwo’s Assetization platform? Then sign up for our Webinar.

Philippe A. Naegeli is Co-Founder and CEO of the «Assetization» specialist GenTwo, one of the fastest growing Swiss finance startups with over 100 employees in Zurich.