The investment management industry is poised for change, driven by growth and globalisation. Numerous industry publications have highlighted how growth may fundamentally change how asset managers operate and compete. For example, PwC’s recent paper titled “Asset Management 2020: A Brave New World” predicts that global AuM will exceed $100 trillion USD by 2020, increasing at a compound growth rate of over 6% annually. Similarly, the IMF predicts that nominal global GDP will increase by 5.15% annually during this time.
Much of this expansion will come from high-growth regions such as South America, Asia, Africa and the Middle East. PwC predicts between 2010-2020, more than one billion more middle-class consumers will emerge globally – the largest single decade increase in history. Growth in these markets will reshape global money flows, helping to strengthen regional capital markets. But some of this growth will also benefit developed markets, where established asset management markets will attract global assets.
Thus, the challenge for most asset managers is how do I prepare my business for growth and how do I differentiate in a globally competitive marketplace?
Unfortunately growth can be limited by operational capabilities, as well as the underlying systems and technology that support operations. While investment teams must be able to change investment strategies quickly to react to opportunities, it can be far more difficult for operations to keep pace with business changes. Now is the time for asset managers to determine whether they can meet these growth requirements by examining the operations and the systems at the heart of their middle-to-back office technology ecosystem.
There are three key features that you should consider as you assess the readiness of your operations:
- First, it is critical that an operations platform can manage trade processing for global securities as asset managers seek growth and alpha internationally.
- Second, systems must provide visibility into and control over assets, including robust data monitoring and reporting tools.
- Finally, an operations solution is only effective if it is easily manageable. Systems should be easily implemented and not require custom coding to meet specific workflow needs. They should integrate cleanly into your existing infrastructure and be simple to use by multiple stakeholders.
Ideally, you want to work with solutions providers who offer multiple ways to manage the system so you have options for how to accommodate growth. Top vendors offer deployed, hosted and outsourced solutions supported by dedicated and experienced staff, providing you flexibility tailored to your unique business needs.
As the investment management industry continues to grow and become more global and complex, there will be more pressure on asset managers to provide reliable, accurate and timely information throughout the investment process. The competitive landscape will compel asset managers to evaluate their ability to grow and differentiate their services, and as a result operations teams should examine their solutions to ensure they are scalable and flexible enough to meet the needs of the growing and global marketplace.
By Christy Bremner, Senior Vice President and General Manager, SS&C