Investment in technology and data infrastructure sit at the top of asset managers’ priorities as they position themselves to deliver business growth in the recovery from the Covid-19 pandemic.
56% say their investment will focus on these areas over the next 12 months and for almost half (47%) on ensuring ESG compliance across their product range. These are the finding of a new report by Funds Europe – The Future of Investment Operations – for Temenos (SIX: TEMN), the banking software company.
The survey of global investment professionals across the asset management sector also reveals Covid-19 has pushed firms to review their IT strategies and transition to the public/hybrid cloud. 62% of respondents say cloud-native solutions will play a key role in their IT strategy, followed by the importance of Software-as-a-Service (SaaS) solutions (48%) and the use of open API (application program interface) technology (46%).
To improve levels of operational efficiency, firms are seeking seamless interconnection between functions along the investment value chain. In the survey, 83% of asset managers say they will extend their strategic alliances with asset servicing and tech partners, enabling connection of middle- and back-office services straight to their front office tools and investment book of record (IBOR).
AI and Machine Learning are set to play a growing role in delivering insights, both predictive and ex-post analytics, across the investment lifecycle. The top applications for AI are portfolio analytics and performance measurement (60%), data sourcing, cleansing and enrichment (57%), and improving the operational efficiency of middle- and back-office processes (56%).
However, augmenting human expertise into AI models will be a priority in applying AI models, according to 60% of respondents. This capability is essential to deliver business intelligence in a way that is explainable to product teams, customers and financial supervisors.
Barry Lee, Business Solutions Director, Temenos Multifonds, comments: “In mapping out the road to recovery, asset servicing firms and fund managers are increasingly looking to take advantage of the tools, analytics and scalability of the cloud. Temenos’ SaaS-based Explainable AI (XAI), for example, enables our fund administrator clients to use AI to reduce manual interventions, detect potential breakdowns in workflow, and speed up exception management related to price movements. This future-proofs their operations against black-swan events and increases overall efficiency and productivity.”