The nature of the asset management industry is changing, and asset managers are moving away from a go-it-alone approach to using data for competitive advantage, and relying on asset servicers as true partners, according to BNY Mellon’s new survey.
The survey, Asset Management: Transformation Is Already Here, finds that asset managers worldwide are balancing operational complexity and efficiency, data management, and risk and resiliency with the need to generate value and achieve growth for their clients.
Respondents reveal how they are rethinking their operating models and considering leveraging service providers to address challenges that fall outside their core investment functions.
BNY Mellon’s Roman Regelman, chief executive of asset servicing and head of digital, says: “They envision a future in which technology platforms, transparency, and data continue to fundamentally alter what’s possible.”
“As a result, asset servicing business models are evolving. I see providers becoming orchestrators of modular, flexible solutions and of information across investment processes,” explains Regelman.
Regelman notes the ability to support asset management transformation depends on servicers being able to play an essential role in creating a streamlined, frictionless, fully integrated ecosystem from the front- to back-office.
The survey finds that 97 per cent of asset managers are considering outsourcing data management and infrastructure.
Back-office processes (90 per cent) is another area where asset managers are looking to outsource, as well as data operations (78 per cent), middle office (61 per cent), and front office (41 per cent.)
According to BNY Mellon, interest in outsourcing data management and back-office capabilities is nearly universal but not all pieces of middle- and front-office functions fall within asset managers’ strategic core.
Elsewhere, the survey highlights that digital imperatives dominate as asset managers are trying to harness digital technologies to support a data-centric world while growing and serving their investors with agility.
“After COVID-19, there is a real need for accelerated adoption of new tools that will drive inorganic growth and innovation. Digital technology will provide asset managers with a competitive edge if they can offer unique solutions,” according to a Spain-based chief investment officer.
This was demonstrated in the survey as 29 per cent of participants cited the evolution of digital technology as being a top trend in asset management over the next three to five years.
Some 14 per cent cited the growth of capital markets as a top trend. Increased reliance on data and analytics (13 per cent), growth in exchange-traded funds as a wrapper for active and passive funds were also among the top predicted trends.
Following this was the emergence of tokenisation as a replacement for traditional structures (11 per cent), fewer providers due to consolidation (11 per cent) and full integration of environmental, social and governance (9 per cent).
The survey results track well with broader industry trends that we see in the asset management landscape, says BNY Mellon. Client demand for investment growth and performance has increased and, at the same time, has become more nuanced.
It is identified that flexibility and collaboration are needed for firms to evolve to a new level of data-centric processes, and frictionless operating models must be offered that let asset managers focus on serving their end clients and achieve long-term growth in this newly arrived future.
BNY Mellon’s research study covers 200 asset managers around the globe. The asset managers participated in the study in Q3 2020.
Click here to see the survey in full.
