Digital transformation is a top priority for asset managers, according to a new report published by banking software company Temenos investigating the views and intentions of the asset management industry over the coming 12 months.
Significant constraints imposed by legacy technology systems however were cited by 54 per cent of respondents globally as a major problem holding them back.
The report entitled: “Digital transformation in fund administration: The road ahead”, delves into responses from over 150 asset managers, fund administrators and custodians across Europe, the United States and Asia.
The global asset management industry is experiencing fundamental shifts that will shape its future. The report shows that digital transformation is set to play a large part in this future. The survey found that investment in new technology and digital transformation is the number one focus in asset management, with 38 per cent of respondents saying it will be their firm’s biggest focus over the next 12 months. Digital transformation is followed by a focus on investment in product development (19 per cent), operational efficiency (16 per cent) and distribution (12 per cent). An overwhelming majority of respondents, more than 90 per cent of those surveyed, also said that investment in operational systems is now essential for asset managers to improve efficiencies and reduce costs. 29 per cent of respondents cited data analytics as the highest priority for investment.
Despite the imperative to digitally transform, nearly a quarter of respondents (23 per cent) said asset servicers, such as fund administrators and custodians, are not currently keeping pace with the changing requirements of asset managers. 54 per cent of respondents globally cite legacy technology as a major problem holding asset management firms back from delivering high quality services through digital channels. In the US, this problem is even more exacerbated, with 60 per cent of respondents saying that legacy systems remained a major problem.
The survey also highlighted that outsourcing of functions to asset servicers is set to narrow, with over two-thirds of those surveyed (68 per cent) saying it was important to have one strategic service provider who can support all outsourcing requirements. Many respondent firms are already moving in this direction, with more than half (55 per cent) saying that they have a single provider in place or will do so within three years.
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