Read this article and learn about:
- Key trends that are shaping the evolution of the asset management industry
- The implications of these trends on the traditional operations and IT set-ups
- The evolution of new requirements and standards particularly in data quality and systems controls
- How asset managers are using a new and more systematic framework to adapt their traditional approaches to managing operating model and technology change
Paul Mawson, PwC Partner, Asset and Wealth Management
Ian Woodhouse, PwC Director, Asset and Wealth Management
The asset management industry is going through a period of major change, which is providing significant challenges to the traditional operating, technology, and data platforms. The way forward is a more structured and disciplined business-led transformation, which focuses on simplification, standardization, and leverage, while also adopting a more integrated model to enable better quality data management.
PwC’s report ‘Asset Management 2020: A Brave New World’1 described an industry with a wealth of global opportunities, balanced against numerous short- and long-term challenges (now also including Brexit). A situation, which it needed to adapt to in order to remain relevant and reap the rewards of agility and bravery in a world where the rate of change seems to be ever accelerating.
When less needs to mean more
In this world of change, the challenge for every CEO and their leadership team is to work out how to achieve more with less. Almost every organization in the industry is battling against a trend of increasing cost and decreasing margins.
The way forward is a more structured and disciplined business-led transformation, which focuses on simplification, standardization, and leverage.
At a recent European asset management conference, a panel of leading chief executives agreed that they needed to become more client-centric offering more bespoke added-value client solutions whilst simplifying their overall offerings and reducing the cost of operating models. The assembled COOs looked suitably worried about how they might achieve this objective.
Meanwhile, the regulatory bodies around the world continue to increase the number of lenses through which they effect control. This in turn continues to make demands, which most organizations are responding to with tactical solutions, embedding additional costs and adding to the complexity of future change.
Past decisions – present constraints
Most companies are agreed that if they had a blank sheet of paper, they probably wouldn’t design what they have today, yet the starting point is the most fundamental constraint that most existing companies have.
So, how do you move forward and meet ever more complex client and regulatory needs, given the starting point isn’t quite what you’d like. Here again the chief executives shone a light on the path to the answer, which all could agree to: it’s all about business-led technology and data transformation.
…it’s all about business-led technology and data transformation.
Can IT and data move from problem to solution?
We live in a society today, where most people are used to the instant gratification of technology. The yardsticks we apply to our personal technology are often beyond that of our corporate technology. A gap, which leaves significant opportunity for the participants in the market today, or for disruptors.
However, in a FinTech world of blockchain, cloud, AI, big data, and many other exciting innovations, the existing reality for many firms is one of a highly complex legacy environment shaped by partial post-merger integration, underinvestment through the crisis, and a need to spend on regulatory compliance. A situation which makes it difficult to know where to start in order to avoid a costly white elephant and a repeat of the never ending ‘Data Warehouse’ project that still scars many of us in financial services IT today.
…the existing reality for many firms is one of a highly complex legacy environment shaped by partial post-merger integration, underinvestment through the crisis, and a need to spend on regulatory compliance.
Asset managers often find themselves caught in the middle of the value chain. Above them are two key stakeholders demanding ever more, their clients and the regulators, below them are often third-party providers, who can provide solutions, but who also bring their own process, data, technology, and integration challenges. Not surprisingly, many organizations are deciding to sort out the foundations of their businesses now and to look to how they can leverage FinTech off the back of this investment.
Emerging good practice is to simplify, standardize, and leverage technology and data
There has been a growing trend in the last few years to implement cross-asset class platforms to reduce the reliance on a fragmented best-of-breed architecture and to provide a more consistent set of capabilities to the front office. These front office capabilities provide a richer set of tools, but perhaps most importantly, a consistent set of definitions for core business processes and their associated data. The foundational data achieved can then be enriched with additional data from other sources to satisfy the additional stakeholder needs.
… a growing trend in the last few years to implement cross-asset class platforms to reduce the reliance on a fragmented best-of-breed architecture and to provide a more consistent set of capabilities to the front office.Better data management can bring efficiencies to compliance and controls through de-duplication as, often, the same data is required to satisfy multiple regulators. Data can also be better harnessed to provide greater insight, research, and analysis of underlying risk exposures across multiple portfolios and funds to support good investment decisions and to meet suitability and investors requirements for more detailed and timely reporting.