Digital fund distribution platforms entering the market could represent a game-changer for the industry, according to research by the Association of the Luxembourg Fund Industry (ALFI) and Deloitte.

The joint study suggests online investment platforms represent a key opportunity for fund managers to engage with a generation brought up in an era of online banking and social media connectivity.

“Asset managers have a once-in-a-generation opportunity to reimagine and modernise its distribution model to address market and operational challenges – for future and current investors," said Denise Voss, chairperson of ALFI.

The research highlighted the possibility of increased engagement with younger investors, identified as millennials, through a platform that could provide peer-to-peer portfolio comparison and socially responsible investment profiles that are tailored to an individual’s preferences.

However, these digital platforms will also, according to the report, lead to a rapid increase in direct-to-consumer distribution for the institutional investor segment as well as in the retail market.

Collecting and analysing data will become paramount to an asset manager’s success, as adaptive firms begin mining myriad data sources for customer preferences and values in order to better understand and market to this new generation of investors.

Through this collection and analysis, an online fund platform could also use client profiling to pare down the available funds universe to include only those which suit an individual’s historic risk profile, sustainability criteria and personal investment goals.

Standing out in the online marketplace will rely on offering key features for the end user, particularly financial education, risk and performance metrics, market insight, and updates on returns compared to investment goals.

“Fintech is more than a buzzword. It will have a fundamental impact on the operating model of asset managers, distribution intermediaries and service providers, who are also facing new investor behaviours," added Voss.

"The investment management ecosystem has not only to increase efficiency, but also to provide a better customer experience if it is to succeed in the future.”