Efficiency Remains Asset Managers’ Priority: Survey
Posted by Colin Lambert. Last updated: July 22, 2022
Investment managers are most concerned about creating efficiencies across their operations in the next two years, followed closely by a focus on cost and enhanced quality and accuracy, according to a survey of 300 global asset management firms sponsored by Northern Trust.
The survey also finds that approximately one-third of respondents are considering outsourcing their FX, securities finance and middle office functions. It also highlights that while interest in digital assets and cryptocurrencies exists, it is by no means on everyone’s radar, with only one in 10 saying that supporting growth in crypto/digital assets is a priority.
The survey, conducted for Northern Trust by WBR Insights, shows asset managers struggling with some of the same issues identified in a 2020 survey, while the global pandemic is causing many to look harder at outsourcing as a solution.
While 50% of respondents said their key strategic priority for the next two years will be creating greater efficiency, nearly as many (47%) also plan to focus on cost control and 45% said enhancing quality and accuracy was a top priority.
The new way of working following the global pandemic has influenced investment managers’ views about outsourcing. In particular, respondents said the remote work environment (60%), cost of maintaining in-house capabilities (52%) and staffing challenges (51%) have increased their likelihood to outsource.
“As we are coming out of a two-year pandemic in which operating models were strained or challenged, there has been a renewed focus on efficiency, and how talent and technology can enable that,” says Ryan Burns, head of global fund services (GFS), North America, at Northern Trust. “The most successful asset managers are leveraging new technologies and operational approaches, while also seizing the benefits of outsourcing, to enable more efficient and effective decision-making.”
Data management is seen as the area with the most potential for outsourcing, with nearly half (48%) of respondents considering outsourcing data management in the next two years.
“Asset managers today want flexibility to choose the best partners for their investment processes,” says Clive Bellows, head of GFS EMEA, at Northern Trust. “For example, they want to be able to select a trading solution, or a foreign exchange provider, or a data management capability that fits the way they work. This optionality can support decisions that ultimately help drive alpha.”