Hexaware-IBS Intelligence explore how AMCs must adopt Advanced Analytics to survive

Hexaware-IBS IntelligenceWith rapid digitalisation across industries, Advanced Analytics is starting to find applications in the otherwise human-centric areas such as asset management firms. It is expected that the adoption of Advanced Analytics, along with Artificial Intelligence (AI), and Machine Learning (ML) will disrupt this space drastically in coming times. India-based IT firm Hexaware Technologies and IBS Intelligence have collaborated on a whitepaper that explores the application of Advanced Analytics and its potential impact on buy-side asset management firms.

The paper discusses the role of Advanced Analytics in Asset Management across Investment research, Client Servicing & Distribution, Operational Efficiency, and Product Development with an emphasis on case studies and the framework for Advanced Analytics implementation. The paper examines three key application areas – Design of investment models, Automation of research, and Sales optimization – to understand the evolution, maturity levels and challenges faced by the firms. It also summarizes the outlook and the path ahead for advanced analytics.

The industry has witnessed significant changes in the environment due to regulations, waning risk appetite and increasing people costs. So, asset management companies (AMCs) are turning to Advanced Analytics to automate parts of their functions as processes to cut costs, which will help in delivering higher alpha (fund performance exceeding market returns). For an AMC, one of the key success factors going forward would be their ability to leverage data to improve alpha and reduce overheads. hence, Advanced Analytics will play crucial in helping them gain a competitive advantage.

However, plagued with legacy systems and resistance to change, AMCs are still struggling to implement Advanced Analytics into their operations, the whitepaper stated. Some of the challenged they face include lack of management buy-in, lack of expertise among other things.

The paper further elaborates on applications of Advanced Analytics in the industry of asset management such as Investment Research, Client Servicing & Distribution, Operational Efficiency and Product Development, illustrating the same with industry case studies.

While Advanced Analytics is here to stay in the industry, it is not expected to completely eliminate the human element of the process. However, its relevance in areas such as alpha generation, asset ideas creation, client servicing, and product development will increase, and eventually, all AMCs must adopt Advanced Analytics to survive and stay competitive. For more insights on Advanced Analytics in the asset management industry, click here.

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