Investment in technology and data infrastructure sit at the top of asset managers’ priorities as they position themselves to deliver business growth in the recovery from the COVID-19 pandemic, a new report finds.
Most, 56 per cent, say their investment will focus on these areas over the next 12 months while 47 per cent say they will target ensuring ESG compliance across their product range. These are the finding of a new report by Funds Europe – The Future of Investment Operations – for Temenos, a banking software company.
The survey of global investment professionals across the asset management sector also reveals COVID-19 has pushed firms to review their IT strategies and transition to the public/hybrid cloud. A total of 62 per cent of respondents say cloud-native solutions will play a key role in their IT strategy, followed by the importance of Software-as-a-Service (SaaS) solutions (48 per cent) and the use of open API technology (46 per cent).
To improve levels of operational efficiency, firms are seeking seamless interconnection between functions along the investment value chain. In the survey, 83 per cent of asset managers say they will extend their strategic alliances with asset servicing and tech partners, enabling connection of middle- and back-office services straight to their front office tools and investment book of record (IBOR).
AI and machine learning are set to play a growing role in delivering insights, both predictive and ex-post analytics, across the investment lifecycle. The top applications for AI are portfolio analytics and performance measurement (60 per cent), data sourcing, cleansing and enrichment (57 per cent), and improving the operational efficiency of middle- and back-office processes (56 per cent). However, augmenting human expertise into AI models will be a priority in applying AI models, according to 60 per cent of respondents. This capability is essential to deliver business intelligence in a way that is explainable to product teams, customers and financial supervisors.
“In mapping out the road to recovery, asset servicing firms and fund managers are increasingly looking to take advantage of the tools, analytics and scalability of the cloud,” Temenos Multifonds Business Soultions director Barry Lee said. “Temenos’ SaaS-based Explainable AI (XAI), for example, enables our fund administrator clients to use AI to reduce manual interventions, detect potential breakdowns in workflow, and speed up exception management related to price movements. This future-proofs their operations against black-swan events and increases overall efficiency and productivity.”