Technology projects to soar in 2017 as asset managers adapt to regulatory and client demands
Technological and operational projects are high on the list of priorities for asset managers over the next 12 months as they respond to the changing regulatory landscape and to meet the evolving needs of their clients.
The report, which is being launched at this week’s TSAM Boston conference, reveals that over half (52 per cent) of asset management companies surveyed are planning to replace out-dated or legacy technologies in the next 12 months.
One in three companies (32 per cent) are also planning to introduce an online client reporting portal for the first time and 14 per cent are looking to launch a mobile app as they look to improve the quality, timeliness and transparency of communications with their clients.
Meeting changing client demands was identified as one of the key drivers of change in the asset management industry over the next five years by a quarter (27 per cent) of the poll respondents.
Data governance initiatives (31 per cent) and outsourcing of technology operations (29 per cent) are also both high on the list of priorities for asset managers over the next 12 months.
The survey, by Osney Media and BackBay Communications, highlights a number of factors that are driving change in the industry, with regulation seen as chief among them. Adapting to regulatory change was cited as a key driver of change by nearly two-thirds (65 per cent) of respondents. Pressure on margin and costs was cited by nearly half (48 per cent), while the rise of passive investing was identified by 39 per cent.
Despite the broad range of challenges facing the industry, many respondents are cautious in their expectations for radical transformation of the industry over the next five years with a quarter (25 per cent) believing that it will not look very different to now. This compares to just 13 per cent that expect the industry to look radically different. Furthermore, while the competitive threats from non-traditional competitors is acknowledged, the majority, 61 per cent, believe that their main competitive set will be the same in five years as it is now. Against this backdrop, it is perhaps unsurprising that the majority are optimistic about their firm’s ability to meet these challenges with 76 per cent describing themselves as either ‘fairly’ or ‘very’ optimistic.
“The asset management industry faces a number of challenges: growth in passive investment is putting traditional fee structures and margins under pressure, expectations and behaviour of clients are evolving and of course the regulatory environment continues to change,” says Jonathan Wiser, director at Osney Media, which commissioned the study and organises TSAM Boston. “We are expecting to see an increase in organisational and technological change projects getting underway in the next 12 months as firms look to adapt to these shifting sands.”
Bill Haynes, CEO and founder of BackBay Communications, the financial services marketing and communications consultancy that conducted the research, says: “One of the most important parts of managing operational or technological change projects is communications. Some projects can impact employees and external stakeholders in ways you might never have imagined and can take a long time to implement. Communicating the goals of a project and setting, measuring and keeping affected stakeholders updated with its progress is an essential component of any implementation.”