Buy Side Sees Emerging Technology as Key to Growth
State Street Corporation announced today the publication of its latest study, New Routes to Growth, which surveyed more than 500 global asset managers, asset owners and insurance companies to understand the challenges they face in achieving their growth objectives. This is the second annual Growth study led by State Street.
The results of the survey show that more than two-thirds (68 percent) of institutional investors are concerned about their ability to hit their growth objectives within the current market environment. Seventy two percent of asset owners expect to adopt a more defensive investment strategy going forward and the same percentage of asset managers will slow their plans for expansion over the next five years.
Against this backdrop, there has been a significant shift in how survey respondents plan to adapt. Nearly half of respondents (48 percent) identified emerging technology as a top enabler of growth over the next five years. This represents a significant increase from the 2017 study when just 18 percent of respondents thought that emerging technology, including blockchain and artificial intelligence, would be a top enabler of growth.
The global survey also found that institutions want to improve their ability to extract better insights from data, with 58 percent of respondents naming this as a key focus area. Strengthening risk analytics was cited by 43 percent of respondents as a top outcome that their technology must deliver over the next year.
“As this survey further demonstrates, the investment industry is in the midst of unprecedented change,” said Liz Nolan, State Street’s chief executive officer for EMEA. “Our clients face increasing complexity and regulatory expectations, as well as the need to upgrade technology and improve their data management; all the while carefully managing costs. Our front-to-back platform is being designed to meet these needs and will provide our clients with an efficient, rationalized system, enhanced investment and risk management and, crucially, the ability to extract meaningful and actionable insights from data.”
There is a note of caution among respondents however, as just over two-thirds (61 percent) indicated they would take an incremental approach to embracing emerging technologies versus re-engineering their entire IT ecosystems. Furthermore, many firms are selectively seeking tech partners as a way to gain scale given the cost involved with an architectural overhaul.
In the UK, integrating new technologies into existing infrastructure and processes is reported to be the biggest challenge around implementation (62 percent versus 45 percent in the rest of Europe). As a result, an increase in acquisitions and partnerships could have the potential to reshape the investment management industry, with more than half (53 percent) of respondents looking at established technology companies to support the development of emerging technology solutions.
Source : Source Street
The strategies are the second launch of Northern Trust Asset Management’s ETF offerings in Europe.
With Thejas Nalval, Co-Founder and Chief Investment Officer, Parataxis Capital
Corporate Sustainability Reporting Directive elevates sustainability information to same level as financial.
Essentia analyses data to create behavorial “nudges” for fund managers' investment decisions.
With Adam Conn, Head of Trading, Baillie Gifford