Imperatives for differentiation and growth:
The investment manager of the future

Investment managers and asset owners globally are at crossroads. Margin compression, shrinking assets under management (AUM) and even regulators in some jurisdictions are forcing organizations to consider acquiring or merging with their competitors. Disintermediation of financial services by technology giants like Amazon and Google poses a growing threat to market share and margins. The industry also faces a brain drain as boomers retire, with talent shortages especially acute for IT professionals supporting legacy investment and accounting systems.

Firms that survive these external threats must decide how to differentiate their products and services – in a way that will grow AUM, attract new clients, become relevant to the next generation of investors and stand out from competitors. What is it that makes their organization different?

A number of avenues exist for firms to differentiate their value proposition. These include diversifying into private assets, offering personalized portfolios at scale, expanding into new geographies, distribution channels and business lines, and launching innovative low-fee investment products.

How can institutional investors implement an innovation agenda that supports differentiation and sustainable growth? Four foundational elements are key:

Be data-driven
Providing investment professionals and operations teams with a centralized, single source of truth and AI-enabled analysis tools helps firms make faster, better-informed decisions across their front-, middle- and back-office.

Migrate to the cloud
The ability to scale operations on-demand, ensure high availability and performance, and support global data residency requirements requires a modern cloud-native architecture.

Future-proof the operating model
Partnering with a trusted global service provider helps firms focus on their key differentiators and core competencies, retire legacy investment and accounting systems, and reduce key person risk.

Leverage open and interoperable platforms
Seamless access to their preferred analytics, data and application vendors provides firms with the optionality needed to support the unique demands of their product and asset class mix, and respond to ever changing client, regulatory and market demands.

At State Street, we partner with clients across the globe to establish a solid foundation that supports their growth and differentiation across the investment management spectrum.

Entering new asset classes
Managing private credit and equity, real estate and infrastructure demands different expertise, data and technology than managing stocks and bonds. Private markets are inherently opaque with a unique set of data requirements that demand modern technology. We provide firms with a unified, whole-of-fund view of exposures, holdings and cash flows across their public and private investments to manage liquidity and concentration risks and stay fully invested.

Personalization
Investors increasingly expect managers to tailor portfolios according to their preferences. Our platform helps clients offer portfolio customization at scale, managing the construction and trading of in-house models, separately managed account strategies or direct indexing programs tailored to the requirements of each individual investor.

ETFs
As the world’s largest ETF administrator, we’ve been an industry innovator for 30+ years. We’re helping clients support mutual fund to ETF conversions and launch active fixed income and other innovative strategies as ETFs.

Harnessing AI
Our global team of data scientists and engineers holds six patents for our innovative AI technology and algorithms, supported by partnerships with Microsoft and Snowflake. We’re applying AI across a diverse range of use cases, from detecting data anomalies to extracting private markets data from unstructured documents and reconciling trade breaks providing the front office with a natural language interface to inform portfolio, risk and trading decisions.

Interoperability
By design, our platform is open and interoperable with leading analytics, data and application providers including MSCI, Factset and Rimes. We manage and maintain the integrations required to deliver a seamless user experience for clients accessing third-party content. Connectivity to Snowflake and other data marketplaces helps clients accelerate the evaluation and incorporation of new data sources in their investment process.

Partnering for success
As a trusted global asset servicer, we help clients strike the right balance between internalization and outsourcing. From trade settlement to outsourced trading and collateral management to fund accounting, clients leverage our services to expand their geographic footprint, streamline operations and bring new products to market faster.