Accenture Capital Markets Blog

Looking across Accenture’s clients in all industries, asset managers have been among the more cautious adopters of cloud. According to Accenture estimates, most enterprises are at around 20 percent cloud deployment currently. Yet, our research, The Future of Asset Management, shows most asset managers are still in the early stages of cloud migration, with just 8% indicating they have already completed their cloud journey.

Time to join the cloud-powered future

I believe now is the time for asset managers to reap the huge business benefits available from adopting cloud-based solutions. Moving to cloud is one of the best ways for asset managers to prepare for a future operating environment that’s now taking shape.

It’s a future in which digital is pervasive – with vital capabilities including getting data from anywhere on any platform (for clients) and working from anywhere (for employees). In which firms should shed the constraints of legacy to compete effectively with agile, born-in-the-cloud competitors. In which the security available from cloud providers compared to on-premise systems is mission critical.

And – most importantly – in which alternative data is key to generating alpha. The need to access, process and base investment decisions on non-traditional types of data is one of the most powerful reasons for asset managers to go to cloud. I’ll say more about this later.

Increased speed and agility at lower cost

But first, let’s look at the wider factors driving today’s more forward-thinking asset management firms to create a foundational enterprise-wide cloud layer. These firms have grasped that they should elevate their performance to new levels by transforming what they do and how they do it – and do it faster. Cloud can help to achieve this by opening the way to higher scalability and speed, improved operating efficiency and faster innovation.

The results from moving to the cloud include the ability to redesign operating models and reduce costs at pace. Our research among asset managers using cloud finds that 63% report improved operating efficiencies for change and run activities, making it the most commonly-cited benefit of cloud ahead of more flexible business models (58%) and the ability to run as an agile business and respond to changing events (57%).

Harnessing the power of alternative data

Another recent Accenture research report in the asset management space found that 40% of those surveyed intend to increase their processing of new forms of data to generate insights. And this points to a further industry-specific reason to embrace cloud. As I mentioned earlier, it’s the opportunity to harness the full power of alternative data.

In the future, the standard “table data” available to everyone won’t be enough to generate alpha. Instead, this will require differentiated “alternative data”, ranging from job postings to satellite images of retailers’ car lots to logs of corporate jet journeys. This vast array of data could provide the inside track for managers to make more targeted investment decisions.

However, the challenge with alternative data is that there’s so much of it from so many different sources. This means realizing its full potential requires massive computing power and storage on a scale that’s only available with cloud-based architectures. So, to generate alpha in the future, cloud will not just be a nice-to-have, but a business imperative.

The journey: Fix systems first – then follow a value-led roadmap

While the benefits of cloud for asset managers are clear, the roadmap can be less so. In our view, what’s needed is a business value-driven approach that involves, firstly, fixing the existing systems by simplifying, consolidating and integrating them, and then moving them to cloud.

Having prepared their legacy systems, firms can create a roadmap for cloud adoption based on complexity, business value and cloud consumption. Less complex workloads like data services, pricing and risk calculations can deliver value relatively quickly, but this may be lower over the longer term. The more complex workloads such as core pre- and post-trade transactional processing applications can be migrated in phases over a five to 10-year planning horizon.

The time is now

In summary, cloud offers asset managers major benefits including improved cost and agility, better client and employee experiences, faster development of new services and revenue streams, and a smaller environmental footprint. But added to this is the ability to drive alpha by leveraging alternative data.

What’s clear is that, in the future, cloud will be a key part of every successful asset manager’s business and technology roadmap. And when should you accelerate your cloud journey? Today.

Learn more about creating the future of asset management. If you’d like to talk about your own journey to 2025, please reach out. I’d love to hear from you.

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