Technology is widely recognized as an important element of an asset manager’s strategy, with research showing that asset managers increase technology spending at a rate of 6% per year. But technology alone isn’t enough to take asset managers to the next level. Technology should be combined with service and expertise to generate significant efficiency gains and cost reductions.
One of the main challenges for asset managers investing in technology is the need for a unified, front-to-back ecosystem rather than the patchwork of disparate single or limited-purpose systems they have currently. While this clunky approach is common, it comes with drawbacks like waiting for batch processing across all systems and needing to update each system individually. As technology continues to advance, the need to replace these makeshift systems becomes more apparent—the weight of workarounds and incompatible technologies can take the entire system down.
A unified system, particularly one that relies on cloud technology, eliminates the complexity of integrating and managing multiple systems, provides the ability to update data across all functions in real time, and enables consistent reporting. However, progress toward reaching this unified system has been slow for many asset managers. Those who have made the leap report a more efficient tech stack and data consistency across all calculations, analyses and reporting, as well as the lower cost of relying on fewer providers.
While a unified system requires less intense maintenance than a cumbersome patchwork system, some maintenance is required. Does your firm have the expertise and resources to accommodate those areas of operations? Outsourcing has become an increasingly popular way to address non-value-add functions. In fact, in a managed services model, outsourced services are usually bundled with the software, moving routine operational activities to experts who have the most up-to-date technology. This provides the multi-pronged advantage of increasing efficiency, lowering operational overhead and reducing risk.