February 09, 2022

Key Trends 2022: Asset Management - Technology

Technology and how it is employed by Asset Managers has moved at a tremendous pace during the pandemic. Whilst there are many positives, one challenge is the continued threat of ransomware attacks and other data breeches. Asset Managers need to continuously look to improve cyber security to avoid this. The need to bring in expertise has seen a number of hires from outside the AM industry and this has put a premium on talent. 2022 looks set to continue this and be a key year for technology teams.

The pandemic has meant three or five year plans have been accelerated. Cloud based systems have been widely implemented thus allowing teams to work more efficiently when working from home. Their ability to share information and intelligence has greatly increased. Further advancements in efficiency are expected in this area.

Technology can also play a part in reducing costs and combatting low cost passive investing. Intelligent automation which employs artificial intelligence and robotic process automation is expected to have an increased budget with the aim of reducing costs. Invesco, for example, have used intelligent automation to save three million minutes per year across 35 business functions at a cost saving of around $2.1 million per year. But implanting these can be expensive and there is the need to have the right talent in place, talent which is already in high demand.

Embedding a T-shaped team can help with the implantation of such AI technologies. A T-shaped team can help bridge the gap between the use of complex algorithms to enable the investment team to better utilise the most vital data thus improving returns and performance. Such innovation teams are not part of the traditional model of Asset Managers and so there may be a need to bring in external leadership with deep routed expertise and strong communication skills to bridge any existing gaps and harmonise the team effort required to properly implement such innovation.

With the continued downward pressure on fees and reduction of costs, one area to look at is the operational side of the business. Outsourcing this function will allow Asset Managers to focus on the revenue generating side of the business.

In addition, there is likely to be a push towards digitisation and robotisation to alleviate some of the costs from an administrative perspective. This will allow staff to focus on more essential revenue generating tasks whilst also implementing large scale efficiencies at the same time.

George Windsor, Head of Asset Management, Carlyle

Key Trends 2022: Asset Management - Distribution