“Rethinking and rebuilding with flexibility, growth and cost in mind can help bridge the gap between where firms currently stand and where they need to be.”
A new white paper from Northern Trust and Coalition Greenwich suggests that asset managers are optimistic about the industry, with a majority expecting growth despite looming challenges and an urgent need for greater technology investment.
The ‘Evolving Asset Management Landscape: Only the Fittest Will Thrive’ study, which consulted 150 asset managers across the globe, laid bare the gap between asset managers’ strategic priorities and their openness to structural changes that could potentially future-proof their operations.
While 84% expect to grow, only 22% plan to implement changes to their operating models to achieve efficiency and cost savings. When asked how they expect to achieve efficiency and cost savings, 63% said they would deploy new technology.
The research revealed asset managers expect their top internal challenges over the next three years to include performance (59%), talent management (50%) and rising costs (44%).
Some of the external challenges on the horizon include increased competition, the impact of higher interest rates, ongoing regulatory changes and technological disruption.
In order to tackle these challenges, the paper recommends the outsourcing of some or all processes and more deeply integrating the front, middle and back office of the investment organisation.
Gerard Walsh, global head of capital markets client solutions at Northern Trust, said: “Managers plan to deploy new technology and implement more cost-effective operational approaches, which can be difficult to do in a contracting market.”
“We believe firms that assess their entire value chain of activities will benefit from the recent evolution of traditional outsourcing models into new areas. This will help them deliver their strategic growth priorities.”
Stephen Bruel, senior analyst at Coalition Greenwich market structure and technology, and author of the report, said: “While there are many unknowns in the current environment, one item asset managers control is their operating model.
“Rethinking and rebuilding with flexibility, growth and cost in mind can help bridge the gap between where firms currently stand and where they need to be.”
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