Please provide an overview of the fund management sector today and what trends you would identify impacting and driving change in the sector.
The fund management sector is coming out from the global pandemic recording significant strength, with assets under management growing at double-digit rates year-on-year, both on the retail as well as the institutional sides. However, profitability was flat across the board in 2020 compared to 2019 figures. It is evident that asset managers are entering a new era, setting priorities based on the experiences and necessities that emerged due to the Covid-19 pandemic. We see that technology-driven change, focusing on digital transformation is more than ever justified and pursued by organisations. The need for automation and better decision making based on data management is becoming more important than ever.
Historically, what role has technology played in supporting the needs of the fund management sector, whether on the sell-side or buy side?
Technology has been supporting the fund management sector covering many different areas in the likes of asset management systems, regulatory compliance, risk management, document management and reporting solutions when it comes to the buy-side, but also solutions dedicated to funds distribution, unit-holders’ management, investor portals and robo-advisory when it comes to the sell-side. Although multiple systems are on offer, the industry seems to be suffering fragmentation issues, maintaining lots of different applications, and lacking real integration.
What current trends can you highlight in the use of technology by fund management firms? What are they focusing on, why and what benefits has that brought the industry?
We see trends being formed around these main themes:
- Cutting costs
- Fully integrated enterprise-level systems can tackle fragmentation and unify operations eliminating the need to maintain multiple systems.
- Operations’ automation to increase productivity and facilitate resources allocation towards business development.
- Directly engaging with end clients, bypassing classic distribution channels. Achieved through powerful client portals, that facilitate automated client onboarding and ordering (subscriptions ,redemption ,switches etc)
- Sustainability offerings and new products developed around ESG concepts
- Digital transformation initiatives
- Mobility capabilities and remote working
Firms are certainly looking into technology solutions that can address the above trends. The reasoning is the significant productivity improvements they will gain whilst not increasing cost, the improvements on the portfolio offering and customer engagement.
What more could the fund management do with the technology available to them today? Could they do more with the infrastructure they have now and/or are there new technologies available to them that they could be using more of?
Fund management firms could explore SaaS cloud technology to further minimise their operational costs and capital expenditure. Solution providers offer modern systems that can simplify back-office processes, but also a set of options for outsourcing business operations, increasing operational capacity and scalability from a business perspective. Lastly, modern technology the opportunity to significantly enhance the client’s digital experience, addressing a wider segment and satisfy their service standards and mobility requirements.
Looking to the future, what role will technology play for the fund management in the next three to five years and what are the tools and capabilities that will enable that?
Looking ahead, we see convergence with the wealth management industry and opportunities coming from a wider adoption of the micro-investing culture. Technology will play a key role in that, enabling asset managers to directly serve the end-client/retail market segment without intermediation, using single platforms. Additionally, we see broader adoption of AI technology in areas that enhance the user experience, in the likes of chatbots, onboarding, face/voice recognition, etc. Machine Learning technologies will probably start playing a bigger role in investment decision making processes, while blockchain technology is expected to provide applications in the space of transaction processing.
About Profile Software
Founded in 1990, Profile Software (www.profilesw.com) is a specialised software solutions provider with offices in key financial centers and a presence in 45 countries across Europe, the Middle East, Asia, Africa and Americas delivering market-proven solutions to the Investment Management and Banking industries. Profile Software is recognised as an established and trusted partner by international industry specific advisory firms. Profile Software’s solutions enable organisations to align their business and IT strategies, while providing the necessary business agility to proactively respond to the ever-changing market conditions.
