Asset managers have complex positions within the financial sector. Complicated workflows, compliance obligations, and achieving higher performance all require the right tools. Asset management technology has the ability to support all these things, creating efficiency and the ability to be more data-driven and competitive.
When investing in the ideal asset management technology solutions, investment managers have many options with varying degrees of functionality and flexibility. So, what do firms need to achieve these benefits?
In this post, explore what technologies and functionality are must-haves and what the future of asset management platform technologies will bring.
The Value of Asset Management Technologies
Like any industry, investment firms are on a quest for digital transformation, which requires adopting technology to deliver on goals. It’s also been an area where organizations have been spending more.
In 2024, the industry’s costs rose to $167 billion, with every cost category growing. The largest was for technology, up 9%. The investment supports modernization and the adoption of new technology in asset management.
So, what do firms get for this investment?
The value and benefits of successful technology and software implementation include:
- Optimized systems that accelerate workflows related to portfolio management and investment decision-making
- Streamlined processes for the entire trading life cycle
- Better, faster insights for more effective data analytics
- Strengthened security over data for more effective compliance
- Scalability that supports growth in terms of portfolio volume and AUM
- Improved operational efficiency
These desired outcomes and expectations also align with industry trends.
Asset Management Technology Trends
As firms look for asset management technology innovations, several trends are impacting how they design their technology infrastructure.
- Spending is up, but firms want to save money through consolidation: As noted, costs for technology have risen. Some of this is unavoidable, as things can’t stay at the same price forever. However, firms are reconsidering their framework and seeking consolidated platforms that integrate and streamline investment management.
- Data analytics and insights are a high priority: There’s so much data that asset management companies create and collect. Making it actionable is a crucial pillar for having effective business intelligence to help with decision-making. Today’s tech stack must provide integrated data management and analytics, and also leverage AI.
- Automation begets efficiency and productivity: The third trend is the ability to automate tasks and activities that are currently manual. Businesses want to deploy automation throughout workflows to reduce the strain on staff, which boosts efficiency and productivity. Further, it eliminates human error that can occur in manual operations.
- Technology complexity drives the need for expert help: Another trend of note is that the responsibilities of in-house IT are compounding. Managing big data and robust technology requires a lot of time and expertise. However, it’s not a core competency, and many firms rely on partners that provide back-office managed services.
What Managers Need in Asset Management Technology Solutions
With the value, benefits, and trends defined, it’s time to focus on the specific software tools that will power firms now and in the future.
Trade Order Management Systems and Execution Management Software
The primary system managers need is an integrated trade order management platform. It combines a trade order management system (OMS) and an execution management system (EMS), which can be sourced from separate providers or a single vendor. With this technology, investment management firms have full trade order management functionality and a host of other features, including:
- Order and execution management
- Automated trade creation capabilities
- Pre-trade compliance
- Advanced trading blotter capabilities, including analytics
- Automation of complex, multifaceted workflows, ideally for multiple asset classes
- Access to alternative trading venues (ATS) and liquidity platforms
In one system, users have a wealth of functionality that saves time, improves performance, and optimizes the trading process, creating alpha.
Portfolio Management Software
Managers should also consider portfolio management software a must-have. Such a solution should ideally combine portfolio management with CRM functionality, especially for separately managed accounts. Users can then have a holistic understanding of portfolio information, including analytics, contact details, and related data. Portfolio Management systems provide a host of features, including:
- Portfolio modeling and rebalancing on an automated basis across asset classes
- IBOR (Investment Book of Record) for viewing portfolio holdings in real-time, as well as historically
- Real-time, pre-trade, and post-trade compliance capabilities
- Performance analytics and portfolio analysis, including attribution
- Robust reporting capabilities
In evaluating options, focus on how the system uses and makes data available. Firms will derive value from asset management technologies that offer real-time data, customizable dashboards, analytics, and automation. Look for a system that integrates front-middle-back office operations and is flexible and customizable.
This software should also provide a client portal so they can gain access to their accounts. With this, clients have complete transparency and can conveniently view information.
BI Reporting
The third essential piece of technology and functionality in the asset management stack is business intelligence (BI) reporting. Most BI reporting in firms is currently manually driven and difficult to scale. The sheer amount of data coming from many sources complicates the situation. However, organizations can use AI-enabled BI reporting to aggregate information from many places, internal and external, to create BI reports.
Look for a platform that does this with ease and doesn’t require special programming or IT assistance. It’s essentially an automation engine that turns data into insights.
For each of these platforms, asset managers should consider cloud hosting and, ideally, cloud-native software solutions. These systems can work together more seamlessly in the cloud. Cloud hosting is secure, reliable, scalable, and cost-effective. Cloud-based software is an essential pillar of the modern tech stack of any asset manager.
What’s the Future of Asset Management Technology?
Complete investment management software capabilities on a front-to-back office basis are currently impressive. There’s more on the horizon. With INDATA, each solution is already leveraging AI and machine learning in innovative ways. INDATA will continue to hone these features, focusing on data quality and usability. Machine learning algorithms will also continue to improve as more data feeds into modeling and analytics.
Automation will become more advanced, too. Currently, automated tasks are primarily rules-based and repeatable. Fusing AI into this enables further opportunities for smarter automation, which can augment human intelligence.
The future investment firms want from technology is how it can differentiate them. A study found that 95% of executives are focusing on this outcome. They are also prioritizing enriched personalization for clients, which technology enables with data analytics. A dedication to client-centricity is more attainable when there are systems and data to sustain it.
Further cloud adoption is on the horizon, and many organizations prefer a private cloud model over a public one. Asset management technology providers will make cloud solutions more accessible to simplify upkeep. There are substantial cost savings with the cloud versus on-premise solutions, as firms won’t be responsible for the underlying IT infrastructure.
Start Your Technology Modernization and Optimization Journey With INDATA
The future of asset management is here, and technology is its foundation. For firms to get and stay ahead, managers need an integrated, innovative asset management platform. INDATA provides managers and all users with empowering software that creates efficiencies, actionable insights, and improved data management.
Learn more about the possibilities by requesting a demo with the INDATA team.
FAQs
Why is adopting asset management technology crucial for new managers?
Using technology supports asset managers in their daily tasks to be productive and efficient. The tools enable users to deliver on the goals of the firm in terms of efficiency and performance. Becoming adept at using new technology in asset management helps them be more competitive and insightful, boosting their skills and effectiveness.
How do Portfolio Management Systems (PMS) benefit asset managers?
PMS provides lots of benefits, including the ability to remodel and rebalance portfolios across asset classes, view holdings in real-time, receive compliance support, access performance analytics, and view a variety of reports.
What are the advantages of using cloud-based platforms in asset management?
Firms can gain many advantages from using cloud-based asset management technology. First, it reduces infrastructure costs, as companies no longer need on-premise equipment and servers. Second, it frees up internal IT resources to focus on more strategic work. Third, the cloud has layers of security to protect against cyber-attacks. Fourth, it enables the ability to scale on demand without reliability concerns.
How can Client Relationship Management (CRM) systems improve client interactions?
A CRM system can contain all interactions and notes from a client. With this information, the software can trigger communications based on actions. Having a single source of truth about customers ensures consistency in service and the ability to personalize interactions.
What factors should new managers consider when selecting asset management technology?
Many criteria come into play when evaluating options for asset management platform technologies. Firms should start by defining their goals with technology and the features that are most beneficial as a foundation for assessment. They should also consider the software’s attributes—is it SaaS-based, secure, reliable, compliant, customizable, AI-infused, and can it integrate with existing systems? Other considerations include the support available for the provider, costs, and implementation frameworks.
