Looking ahead, 84% of asset managers are planning to develop blockchain and distributed ledger technology to synchronize data and processes, according to BNY Mellon.
The latest chapter of BNY Mellon’s study: “Asset Management: Transformation Is Already Here” provides a detailed understanding of how digital technologies can enable organizations to drive top-line growth by transforming the client experience.
According to the findings, the uptake of blockchain technology goes hand in hand with plans to leverage asset tokenization, with 72% of respondents planning to develop digital assets over the next three years.
“Together, these technologies could open up product development opportunities and broaden investment options for new pools of investors. It could also offer liquidity to investors in traditionally illiquid investments, such as alternatives,” BNY Mellon said.
Technologies that bring additional enhancement to clients’ experiences and their investment returns also rank high on the list of digital imperatives for asset managers within the next three years.
These efficiency technologies include machine learning and artificial intelligence (78%), predictive analytics (75%) and robotic process automation (75%).
Effective deployment of these advanced tools will be essential for asset managers to remain competitive in an increasingly complex market.
“Digital assets are here to stay. Enabled by distributed ledger technologies, digital assets including cryptocurrencies, stablecoins as well as tokenized forms of other assets will be an important part of the financial ecosystem,” said Mike Demissie, Head of Digital Assets Unit and Advanced Solutions at BNY Mellon.
Cloud computing still holds a dominant position among asset managers’ digital imperatives in their planning for the next three years.
Almost all (96%) respondents said they are currently leveraging cloud computing to drive digital and operational transformation.
They also rank it as the single most important technology at present, according to the findings.
The need for better investment outcomes has driven the industry towards digitization for some time, but COVID-19 accelerated the trend.
Janelle Prevost, Head of Strategy and Digital for Asset Servicing, BNY Mellon, commented: “Asset managers have long been working on how they can harness digital technologies to operate efficiently. The pandemic has accelerated this as they focus on building greater resiliency in their organizations.”
Survey respondents said they are prioritizing more established and proven technologies as they continue or embark upon their digitalization initiatives. However, they have not lost sight of an ambitious lineup of technologies that can unlock future innovation, according to BNY Mellon.
Survey participants identified several foundational technologies and organizational obstacles they see on the path to improved investment outcomes and the operational transformation needed to deliver them.
According to the findings, respondents view regulatory concerns as their biggest challenge (68%) to the implementation of digital and operational transformation.
Not far behind is the perennial issue of integrating new technologies into legacy IT systems (64%).
According to the findings, asset managers believe that high levels of collaboration and trust between internal functions and with external providers can help transcend the inherent barriers to achieving digital imperatives.
“More than two-thirds of respondents say they are planning to streamline relationships with a few best-of-suite vendors and providers. Because of perceived internal skills gaps (48%), many asset managers are looking to outside experts to accelerate their digital transformation.”
In addition, respondents showed a strong preference (67%) for relying on core financial service providers.
“This strategy allows them to take advantage of the investments their providers have made in digital technologies and innovation. It results in a common platform and an ecosystem where they collaborate closely with a handful of vendors and providers.”
“It is becoming clear that asset managers no longer view financial service providers as merely third parties working in the background to process transactional information. Instead, asset managers want to tap into service providers as strategic assets that can help support growth and innovation. The digital imperatives for business transformation call for intensive, high-trust collaboration.”
