Linedata, a global provider of asset management and credit technology data and services, has unveiled its tenth Global Asset Management Survey Report in partnership with financial services insights and advisory firm, Aite Novarica.
The survey of 200 asset managers, hedge funds, fund administrators, banks, wealth managers and custodians across Europe, North America and Asia, highlights the current state of the industry, operational and technology trends that are shaping day-to-day practices and how the industry will continue to evolve.
Since the last survey was conducted, in 2019, much has changed from a global, regional and industry perspective. As the world navigates the changing nature of modern day investing and ever-evolving customer needs, there are a few factors that are clearly shaping asset management – ESG, cybersecurity, transparency, artificial intelligence and machine learning.
“Over the last two years, asset managers have had to reprioritise their business operations and make a dramatic shift that focused more on innovative options, risk management solutions and creating a greater sense of transparency with employees and clients,” says Linedata’s Global Head of Asset Management, Gary Brackenridge. “As we look to continue successfully navigate the changes to come, we must focus on integrating solutions into portfolios that align with organisational and customer values.”
According to there survey, while 67 per cent of respondents have prioritised the integration of ESG factors into their investment framework, 30 per cent believe the integration into portfolios is a lower priority.
Overall, survey respondents have incorporated ESG integrations by creating a centralized ESG team (46 per cent), receiving a score from an ESG rating company (43 per cent) and becoming affiliated with sustainable investing organizations globally and regionally (42 per cent).
Additionally, respondents cited ESG integrations are a lower priority for the following reasons: lack of client demand (33 per cent), lack of industry standards (31 per cent) and two respective groups believe there is deficient training and support, and the “death of” ESG data and scoring (each totalling 29 per cent).
With threats on the rise, 35 per cent of firms reported being most concerned about how cybersecurity will impact their business, a change from 2019 where that was not a top 3 concern.
In addition to heightened focus on cybersecurity, managing risk ranked as the second biggest concern (29 per cent), followed by vendor oversight (26 per cent). All of which, can be closely tied together.
In 2019, investment performance (34 per cent), attracting new clients (34 per cent) and operational efficiency (33 per cent) were noted at the top three challenges in investment management.
Artificial Intelligence and Machine Learning see growth in deployment for operations and compliance use cases – more than 62 per cent of respondents agree AI and ML use cases have grown year-over-year.
Of those surveyed, the population with the highest adoption rate are focused on regulatory know your customer (KYC)/anti-money laundering (AML) requirements (70 per cent) and portfolio and risk analytics (69 per cent).
The path to differentiation is beginning to diversify, 20 per cent cited risk management as a key differentiator, followed by investment performance (19 per cent), transparency (16 per cent), innovation (12 per cent) and cost structure (10 per cent).
For the asset management industry, resiliency and adaptability to the shifting landscape is crucial for success. The Covid-19 pandemic has shifted demand, making the future of the industry refocus and emphasise its attention on technology that will drive forward customer and client satisfaction, as well as operational simplicity across the board. The asset management industry will continue to see a surge in environmentally focused investments and products with the emphasis on simplifying and digitising antiquated processes.
