The Impact of Technology and Digitalization in Asset Management

The Impact of Technology and Digitalization in Asset Management

We all have witnessed the wonders technology has brought in various sectors and asset management has not left behind. Asset managers round the world have raised the bar, introducing new business models with the potential to disrupt the post-trade ecosystem. The impact of many asset management platforms have come forward across the ecosystem and they have also proven why moving beyond the temperature is also necessary for survival in an increasingly competitive market.

During the past 30 years, processing has moved from handwritten ledgers to real time activities and data. Instead of observing new technologies in isolation, viewing all of the developments together shows the powerful effect of those technologies on business operating models of asset managers and therefore the way clients buy their services. Technologies coming down the road, like distributed ledger, will streamline processes for fund promoters and transfer agents, which is able to end in a less expensive and simpler experience for the tip customer.

A Significant game-changer

Without any doubt, data has been a game changer. For post-trade organizations, data will become increasingly important within the future. Historically, post-trade services are provided as a part of a custody deal. This can be changing and data has become a key factor for clients, who will want data that’s accurate and delivered to the correct place at the correct time. This needs an excellent deal of labor on the part of the post-trade organization in terms of creating the structure, management and delivery of knowledge. To do this, organizations are creating data lakes, which enable data to be interrogated without the need to reformat it for every form of enquiry. Data lakes will lead off the identical variety of dramatic change that was witnessed as asset managers moved from handwritten ledgers to PCs.

Attention Seeking Trends

One of the essential trends that has grabbed the attention of asset servicers is Open architecture as they are closely following it. Clients are going to be ready to choose better or breed solutions from a range of providers, instead of being locked into one provider. This can be a more prudent approach, enabling clients to spread their risk instead of wishing on one service provider. One can safely assume that to be among the winners in the current increasingly competitive post-trade environment, the service providers must adopt an open architecture mindset and provide solutions that aggregate data and provide a holistic view to their clients.

Regulatory pressure is another trend that has played a major role within the asset management business. In order to supply greater flexibility to clients and enable more self-service functionality, service providers are developing new asset management business models. Instead of waiting several days for a report, clients can instantly access information and build tailored reports, which might then be passed on to their customers. The broader digitalization trend within the financial services industry will affect asset management players like fund manufacturers, who are going to be disintermediated from the top investor. Investors are going to be ready to access products via digital platforms like smart phones; the millennial generation want apps and instant responses, as they will deal directly with distributors, who will help them manage their investments. Another feature / characteristic of this group is that they are required to take a position and see the impact of that investment in terms of economic, social and company governance (ESG). This may become the norm and benchmarks will evolve to live the performance of nations and corporations accordingly.

Essential Considerations

As the number of FinTech firms grows, the amount of solutions and therefore the technology they build for these solutions also increase. The issue that several asset manager firms face is what solutions to require and what to depart from. Many asset managers will need to look beyond their usual procurement processes and appear at a mix of providers to supply an overall solution for one a part of their business. But, as always, the business must understand their needs and requirements.

What does the Future Hold?

Asset management is arguably one among the foremost important jobs when it involves managing a business and is significant to securing financial success. There has been a drastic transformation in the asset management arena over the years. These changes have meant that the arena has evolved to stay up and asset managers are taking more factors into consideration when it involves regulating and reporting on their asset portfolios, all whilst employing generic technology advancements.

Businesses are coming up with more holistic solutions for investors to make process simpler, safer, and secure. Instead of specializing in an exceedingly particular instrument and dodging clients who want to feature something else to the combination, managers will cooperate with others so as to fulfill their customers’ requirements. The future of asset management looks promising from here.

Leave a Reply

Your email address will not be published. Required fields are marked *

Top