Asset management industry shows operational resilience in the aftermath of the pandemic

By Gaia Lamperti

Despite the uncertain times of the past year, global asset management firms have shown resilience and adaptability to the shifting landscape throughout the Covid-19 pandemic and in its aftermath, setting the future of the industry for growth and success.

These were the findings of Linedata tenth Global Asset Management Survey Report in partnership with leading financial services insights and advisory firm, Aite Novarica which highlights the current state of the industry and operational and technology trends shaping its evolution.

Linedata, the global provider of asset management and credit technology data and services, targeted global executives throughout the industry to have a better understanding of the market in the aftermath of the pandemic and what the main players in the space are thinking.

“Over the last two years, asset managers have had to reprioritise their business operations and make a dramatic shift that focused more on innovative options, risk management solutions and creating a greater sense of transparency with employees and clients,” said Linedata’s Global Head of Asset Management, Gary Brackenridge. “As we look to continue successfully navigate the changes to come, we must focus on integrating solutions into portfolios that align with organisational and customer values.”

The Covid-19 pandemic has shifted demand, making the future of the industry emphasise its attention on technology that will drive forward customer and client satisfaction, as well as operational simplicity across the board and environmentally focused investments and products.

Since the last survey was conducted in 2019, much has changed from a global, regional and industry perspective. “An interesting aspect is that, while in 2019, the top 3 concerns faced by the respondents were all-around ways to make money; this year, their concerns focused on ways to protect that money. And this is not surprising at all if we consider what we have all been through and that risk mitigation strategies have now become a number one priority for major players in the ecosystem,” Brackenridge told IBS Intelligence.

The survey found out that 35% of firms are feeling concerned about how cybersecurity will impact their business while managing risk (29%) and vendor oversight (26%) ranked as the second and third biggest concerns.

“Other important trends that we have been noticing is that firms are now more interested in partnering up as a way to consolidate vendor relationships and that Cloud adoption dominated so many of the conversations we’ve had,” Brackenridge added.

When it comes to artificial intelligence and robotic automation processes, more than 62% of respondents agreed that the use cases for these technologies have grown year over year. Yet, Brackenridge commented, asset managers are just “at the beginning of leveraging AI/MLat operational levels across the enterprise. But they are looking at it more and more, and the role that these technologies can play in asset management to impact operational outcomes will surely become a central topic of discussion for the next few years.”

Another factor that is clearly shaping asset management is ESG integrations. “ESG topics are now a main concern of the industry, attracting investments at a large scale to put practical steps in place,” Brackenridge said. Overall, survey respondents who have acted on these commitments, have been creating a centralised ESG team (46%), receiving a score from an ESG rating company (43%) and becoming affiliated with sustainable investing organizations globally and regionally (42%).

Yet, challenges remain. While 67% of respondents have prioritized the integration of ESG factors into their investment framework, 30% believe the integration into portfolios is a lower priority due to lack of client demand, industry standards or support.

“Overall, from our analysis, we can say that the industry has adapted very quickly and with resilience to the changes of the past year in a very resilient way from an operational perspective, and that has done an amazing job at fulfilling the sacred duty of managing other people’s money,” Brackenridge concluded.