Asset managers spend millions but still lag on tech

UK-based asset management firms are spending an average of £15 million (€17.1 million) a year on digital transformation, which they see as a top priority.

According to a survey by asset management consultancy Alpha FMC many are even spending up to £50 million and above.

The survey of 15 of the largest global asset management firms, collectively with over £7 trillion in assets under management, found over two thirds felt slowed down by legacy systems and culture clashes.

Nearly two thirds felt a need for a widespread change in company culture and mindset and almost half said lack of resources or relevant skillsets were slowing progress. A similar number of firms felt that a lack of investment was holding back digital innovation in their firm.

There was little enthusiasm for complex digital technology like blockchain in which fewer than one in ten had invested. But nearly a third had a robo-advice platform.

Kevin O’Shaughnessy, head of digital at Alpha FMC, said the asset management industry was at a “key juncture”.

He said: “How to remain ahead of the curve, is now a board level agenda item for many firms. However, the industry is still experiencing growing pains in its digital journey.”

The research suggested that over the next three to five years, asset managers will turn their attention away from more traditional digital platforms such as data management, cloud services and social media and focus instead on more innovative technologies like artificial intelligence, machine learning and blockchain.

Few firms were actively involved in fintech through acquisition or substantive partnerships and over two thirds had neither invested in fintech platforms nor had plans to do so.

Only 15% said they were focused on identifying and integrating fintech solutions which range from robo-advice and artificial intelligence to educational platforms.

“Many asset managers are not yet fully involved with the fintech community given the risk and upfront cost of investing in companies and proprietary software,” O’Shaughnessy said.

He added: “Most are also overwhelmed by the plethora of start-ups and fintech firms and find it hard to decipher who to talk to.”

©2018 funds europe

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