LOW RES MBR ISSUE 36
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Malta Business Review<br />
TECHNOLOGY INFRASTRUCTURE<br />
The Core is Cracking<br />
Asset Managers Must Reboot Their Technology Infrastructure<br />
By Jay Wolstenholme<br />
Thin investment returns, shifting regulations,<br />
and tight operating margins are forcing asset<br />
managers to evolve their operational and<br />
technical business models to stay competitive.<br />
Competition among managers is fierce, and<br />
the need to differentiate themselves beyond<br />
performance, through portfolio breadth,<br />
operational efficiency, client communications,<br />
and smart marketing.<br />
The six buy side front-to-back operations and<br />
technology trends tracked throughout 2016<br />
and into 2017 are still very much in play.<br />
1. Low Return Investment<br />
Environment, Multiasset<br />
Portfolios<br />
2. Reevaluating Operational and<br />
Technical Architecture Due to<br />
Regulatory, Client Demand, and<br />
Cost Pressures<br />
3. Increased Demand for<br />
Investment Decision Support<br />
Tools from AMs and Asset Owners<br />
4. Growing Adoption of Systems and<br />
Business Process Outsourcing<br />
5. Growing Exploration,<br />
Experimentation, and Interest in<br />
Use Cases for Big Data and AI<br />
6. Asset Managers Search for<br />
Greater Volume and Direct<br />
Distribution<br />
These trends hold up well, but within these<br />
six there is an underlying theme lurking. This<br />
certainly sounds ominous, and unfortunately<br />
in a way it is: the buy side needs to pay<br />
some back dues for not paying as much<br />
attention and effort to its full front-to-back<br />
investment processes. When investment<br />
returns were high, it was convenient to patch<br />
in manual operational processes to get past<br />
the problems, but in the current economic<br />
and investment environment this ln longer is<br />
sustainable.<br />
In order to have an industrialized asset<br />
management operational base the technology<br />
foundation needs to be automated, digital,<br />
reliable, efficient, and cost-effective. For the<br />
majority of asset managers, this will mean<br />
needing to optimize incumbent systems<br />
rather than replacing systems. <strong>MBR</strong><br />
if you would like a copy of the report or to<br />
speak with Celent Analyst Jay Wolstenholme<br />
about the research: www.celent.com<br />
Credit: Celent, a division of Oliver Wyman<br />
Low Return Investment Envoirment, Unique Mandates, and Multiasset Portfolios<br />
Client requirements differ across segments<br />
DB Pensions | DC Pensions | Insurance | High-Net Worth | Endowments & Foundations | SWFs<br />
Envolving investor priorities, sophistication and regulations<br />
Capital<br />
preservation<br />
Low Fees<br />
Diversification<br />
Absolute<br />
returns<br />
High Liquidity<br />
Transparency<br />
Asset allocation strategies / multi-asset<br />
Equities<br />
Fixed<br />
income<br />
Alternatives Passives Multi-asset Direct<br />
Spectrum of investment strategies<br />
Beta<br />
Factor Smart<br />
Beta<br />
ALM<br />
LDI<br />
Total<br />
Return<br />
Alpha<br />
Derivative<br />
Overlay<br />
PE/<br />
Acquisition<br />
48
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