Custodian banks and fund administrators are “not keeping pace” with the changing requirements of asset managers, research by Funds Europe and Temenos, a software company, has found.
The survey* of asset management firms globally found nearly 25% of the 150 respondents felt asset-servicing firms were not doing enough to help investment managers deliver quality services through digital channels.
Our findings were described as a “wake-up call” for custodians and administrators.
Firms from Europe, Asia and the US responded to the survey, including some asset-servicing firms.
Digital transformation was the top priority in asset-manager operations, but just over a half of the respondents – rising to 60% in the US - said legacy technology was a major problem.
In fact, just over 90% said that investment in operational systems had become essential for asset managers to improve efficiencies and reduce costs, with data analytics a particular priority.
The majority of firms (38%) said investment in new technology and digital transformation would be their main operational focus for the next 12 months.
Other priorities were:
- Product development (19%)
- Operational efficiencies (16%)
- Distribution (12%)
Many respondent firms said they were moving towards having one provider for asset servicing. Just over half said they had a single provider in place or will do so within three years.
Oded Weiss, managing director of Temenos, said: “The results of this latest survey are a clear wake-up call for asset servicers. With a backdrop of flat or declining profitability within the industry, asset managers are now demanding the tools and capabilities to drive innovation and deliver the right products and services quickly.”
Many fund administrators and custodians have not deployed the right digital infrastructure to realise the optimum efficiency they require to succeed, Weiss added, and they face a “survival-of-the-fittest” where “only those who can deliver digital transformation will thrive”.
*The findings are contained within a report: Digital transformation in fund administration: The road ahead
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