SimCorp, a leading provider of investment management solutions and services for the global financial services industry, today released a survey, which shows significant assets under management (AuM) and revenue growth expectations from investment managers in the next three years. The majority of the surveyed firms cited ‘provision of superior service’ and ‘product innovation’ as the main areas of focus for supporting growth.
The survey, titled ‘Unlocking Growth Through Innovation’, was conducted by Lindberg International and was supplemented by qualitative interviews by Citisoft.
In the survey, representatives from 83 investment management firms from Europe, North America and Asia Pacific were asked to project their annual growth rates in the next three years. Eighty four percent of large asset managers (more than 200 employees) expect annual revenue growth of 6% or more whereas 36% of the small asset managers (less than 200 employees) indicate the same. For annual AuM, 73% of the large firms and 56% of the smaller ones expect a growth of more than 6%.
The industry’s very positive sentiment towards growth over the next three years is surprising given that revenue and AuM growth across investment management stayed almost flat in 2015. Other highlights of the survey include:
European and Asia-Pacific respondents are more optimistic about AuM growth than their North American counterparts. Forty-eight percent of European and 55% of Asia-Pacific respondents expect annual AuM growth of more than 10% compared to only 17% for North American respondents.
Provision of superior service is the most predominant strategic focus area, followed by product innovation. Surprisingly, the survey shows that less importance was placed on M&A growth strategies and geographical expansion.
Close to 50% of the respondents cite regulatory compliance as the biggest barrier to growth. The issue of regulation is more acute for smaller asset managers than for the larger ones.
Competitive pressure and retaining elite talent are other prevalent barriers to growth.
Commenting on the findings of the survey, David Beveridge, Senior Product Marketing Manager at SimCorp said: “Stating that you want to grow by a certain percentage is one thing, figuring out how to best support your growth strategy is another. If these investment firms, in particular the large ones, are to realize their optimistic growth projections, they should take a critical look at their IT infrastructure, ensuring it enables them to operate efficiently, scale their business, and make informed investment decisions.”
Adding to this Steve Young, Managing Director, Citisoft EMEA, said: “A key conclusion from the qualitative part of this survey is that no matter which growth strategy an investment manager pursues, a consolidated and modern IT platform is essential. Whether growth is to be achieved through superior client service or product innovation, it is dependent on the ability to present timely, accurate investment data across the organization and to bring new products swiftly to market. Both require tight system integration front-to-back.”