Supporting the investment process with best-in-class tools and data is the biggest operational challenge for North American asset managers, according to the Global Asset Management Survey, a biannual report on investor sentiment conducted by Linedata.
“In the midst of today’s economic landscape, it comes as no surprise that operational efficiency takes center stage as the top strategic priority for asset managers in 2023,” said Timothée Raymond, Head of Innovation and Technology at Linedata.
“This underscores the urgent need for companies to harness the power of automation and drive digital transformation to optimize processes, boost margins, and stay competitive,” he said.
The report reveals that in North America, the use of AI tools has been concentrated in the front office, to support investment research (33%), portfolio analytics (25%) and investment data management (24%).
However, up-take has been slow across middle and back-office functions, with less than one-fifth of firms having implemented AI in areas such as post-trade compliance and operational risk management, the report said.
According to the findings, from an organization-wide perspective, cybersecurity and data management are the main areas of focus for IT investment among North American firms.
The report also reveals that adapting to new regulation is seen less of an issue in North America than in other regions, with just a third citing this as a key operation challenge, versus 50% of European firms that say this.
Now more than ever, embracing transformation is essential, and the emergence of disruptive technologies such as generative AI presents unique opportunities for accelerated progress.”
In the US, new regulation from the SEC and NYDFS, among others, is putting pressure on asset managers not to only have robust cybersecurity processes and technology in place, but to be able to document these, the report said.
As both regulatory pressure and sophistication of cyber attacks intensify, security initiatives will demand a significant share of IT budgets in the near term, according to Linedata.
The survey also reveals that many asset management firms are moving towards outsourced solutions.
“Outsourcing is viewed not only as a cost and resourcing play, but as a means of accessing the most advanced technologies in the market,” Raymond said.
