The COVID-19 pandemic has amplified the need for asset managers to adopt and integrate new technologies to survive and thrive in the post-pandemic world, according to new survey findings by BNY Mellon’s head of investor solutions, Janelle Prevost.
Prevost’s report, entitled “Asset Management: Transformation is Already Here”, reveals that asset managers are largely in consensus to rapidly build — or even begin to implement — advanced technology within their businesses, which has been accelerated and underpinned by the pandemic.
In the report, Prevost comments: “The need for better investment outcomes has driven the industry towards digitisation for some time, but COVID-19 accelerated the trend. The pandemic brought the connections between better investment outcomes, better data and transformed operations starkly into the foreground.”
She adds: “Market volatility increased the need for faster responses to rapidly changing conditions. Remote working exposed the shortcomings of relying on manual and paper- based processes. The ongoing pandemic resulted in extended needs for social distancing and remote work, making growth more difficult to achieve. Above all, it highlighted the importance of business process resiliency and the kind of agility that enables asset managers to respond to — or even predict — new opportunities and risks.”
Asset managers who took part in the survey were asked which digital capabilities or technologies they are currently leveraging to drive digital and operational transformation.
Almost all (96 per cent) respondents say they are currently leveraging cloud computing to drive digital and operational transformation. They also rank it as the single most important technology at present.
The most popular choices for future digital and operational transformation are cloud computing (88 per cent), predictive analytics (75 per cent) and blockchain and distributed ledger (84 per cent).
However, the report highlights that asset managers have “few illusions” about the ambitiousness of these digital imperatives for transformation, with respondents viewing regulatory concerns as their biggest challenge (68 per cent).
“Achieving full-scale transformation is far from straightforward given the complexity of many managers’ operations, which may span different markets, products and geographies,” comments Prevost.
Other factors that asset managers say pose the biggest challenge to the implementation of digital and operational transformation in their organisation are integration difficulties with legacy IT systems and technology (64 per cent) and lack of appropriately skilled and specialist staff (48 per cent).
In efforts to decrease the occurrence of the aforementioned issues, the survey finds that more than two-thirds of respondents say they are planning to streamline relationships with a “few best-of-suite vendors and providers”.
Due to perceived internal skills gaps (48 per cent), many asset managers are looking to outside experts to accelerate their digital transformation.
“Asset managers have evolved from a “survival of the fittest” mentality to seeing themselves as part of an ecosystem,” says Prevost.
As a result, the survey finds they place open ecosystems (54 per cent) highly in the ranking of ways to accelerate innovation.
“This approach to infrastructure creates a balance between choice and openness. It streamlines the ability to integrate various vendor solutions according to their individual needs and strategies,” Prevost adds.
BNY Mellon asked more than 200 asset managers around the world to take part in the survey. Some 50 percent were based in North America, 40 per cent in Europe and 10 per cent were based in Asia.
The majority of respondents work for an independent asset manager (79 per cent), 13 per cent for a bank-affiliated asset manager, and eight per cent for an insurance company.
