Few industries are experiencing changes in technology advancement as dramatically as investment management. No longer is the impact limited to sophisticated functions such as investment research within the front office—nearly all aspects of asset management are being disrupted. Even asset classes that many expected to remain analog are being digitized at an unprecedented rate.
A new reality for technology investment
Asset managers were already investing in technology to drive greater efficiencies before the pandemic. But COVID-19 has turbo-charged this. The Accenture Tech Vision 2021 report states the past year has ‘poked holes in long-standing norms about how companies operate and how people live.’ The message? The future is here faster than anyone thought—and companies need to catch up.
I believe the trends identified in our Tech Vision research could help asset managers create a roadmap to the industry’s future. Four of the trends are especially relevant, with two helping to redefine how technology will enable the business, and two playing to workforce and talent needs. Today, in my first post, I’ll zero in on the foundational trends, centered on technology architecture and partnerships.
‘Stack Strategically’—architecting a better future
Across industries, companies are now competing based on their technology architectures. Business and technology strategies are becoming indistinguishable. Today’s technology architecture choices will likely determine—and possibly restrict—what firms can do in the future.
The way you lay down the platform for change matters: tapping into the cloud, embracing edge computing, thinking about data and artificial intelligence, starting to incorporate new technologies like quantum computing. All of this feeds into the experience layer—which would shape how you interface with employees, partners and customers for years to come.
Many asset managers have already undertaken a huge amount of infrastructure modernization. But the industry’s decentralized nature means many have been ‘rolling their own’ and still have significant legacy technology debt.
How can firms clear the logjam? In one word, cloud.
Cloud can transform everything from how businesses operate to how they partner, compete and drive value. Our Tech Vision research shows that in the next three to four years companies will move from 20% in the cloud today to 80% in the cloud. But most asset managers are still in the early stages of cloud migration. They need to close the gap.
What does this mean? Rather than thinking about just moving apps to the cloud, it’s vital to look at apps and data together—and add talent as the third part of the equation. So, a rapid and successful migration to cloud involves integrating initiatives around applications, data and talent into one exercise.
Some questions for asset managers to consider to ‘Stack Strategically’:
- How will you benchmark your current digital transformation efforts against your asset management peers?
- How much focus will you put into accelerating investments in core technologies like cloud, data, analytics and mobility?
- How will you identify new avenues for digitally driven products, services and customer experiences that leverage your escalating technology capabilities?
From ‘Me to We’—A multiparty system’s path through chaos
For asset management, the challenges and opportunities presented by the evolving technology landscape are vast, and largely impossible to tackle alone. Multiparty systems—vendor platforms with an ecosystem around them—could overcome this barrier by enabling a shared data infrastructure between organizations that drives efficiency and can power new business and revenue models.
Shared infrastructures could include blockchain, distributed databases and tokenization, among others. And because multiparty systems tend to boost resilience and adaptability, the idea of building architecture across an ecosystem of companies has gained ground during the pandemic.
For asset managers, multiparty systems bring significant opportunities, especially around capabilities like tokenizing assets or streamlining and automating the settlement of securities using blockchain. As companies merge and combine their growing cloud capabilities in exciting new ways, new partnerships may be forged, and industry boundaries challenged. As this ecosystem economy takes shape, the most immediate step that asset managers should take—in common with other industries—is to ensure they have the foundation needed to participate in it.
Some questions for asset managers to consider when going ‘From Me to We’:
- How will you build a data culture that supports the transfer of data between your business and the ecosystem you participate in?
- Which multiparty systems do you believe present the greatest opportunities for your business?
- How much of a benefit would it be for you to share a single source of the truth securely across your supply ecosystem?
I believe that for asset managers, cloud and multiparty systems will be key foundations of the industry’s future—and that now is the time to prepare. In my next blog, I’ll throw the spotlight onto the Tech Vision trends related to talent: “I, Technologist” and “Anywhere, Everywhere.” Stay tuned.
Given the regulatory and data privacy concerns with the asset management (and broader capital markets) industry, how would so many different parties with different tech stack adopt the same cloud infrastructure to ensure ecosystem collaboration?
For just the reason you say, it will be quite some time before there is true ecosystem collaboration occurs on the cloud. First banks have to move their own legacy platforms and data to the public cloud. Then partners can begin to test how to share data and conduct transactions on the cloud. This is an industry transformation that will occur but it is in the early stages and it will take time. Already some of the largest banks are planning / moving trade and post trade systems to the cloud but standards and protocols will need to be developed to ensure data privacy. Regulatory reporting on the cloud will happen but will also take time for both banks and regulators to build these capabilities and create secure environments. Block chain on the cloud has the potential to safeguard data.