Strategic Adoption of New Technologies: Key to Growth in Asset Management 

Getty Spiros

Asset managers seeking to be more efficient or to scale their business need to outsource generic service functions so they can focus on the things that differentiate them.

July 2023

That was the central theme of the “Keeping Pace with the Rapid Evolution of Product and Investment Strategies through Operational Transformation” panel at this year’s IMpower FundForum.

Managing rising costs and using technology to accelerate growth have become two major priorities for asset managers over the past year. But, antiquated systems are hindering rather than driving growth for asset managers.

“Because of the structure of many large firms, tech is an inhibitor, not an accelerator,” explained State Street’s Charles River Development President and CEO Spiros Giannaros during the panel. “They have to deal with the rising cost of labor along with the rising cost of tech, and are looking to shift that burden to someone else.”

From the increasing costs that have led investment companies to shift the tech innovation burden to third parties, to the challenges and merits of outsourcing and scalability, the panel closely examined the complexities of profitable growth and emerging technologies in the investment industry.

Giannaros was joined on the stage by Benjamin Lucas, CEO of Amundi Technology; Scott Bevier, global head of Investment Operations Services at J.P. Morgan; and Michele Nicoletta, vice president of Fixed Income Corporate Development at ICE. IMpower FundForum, held on June 27 and 28 in Monaco, brings together the world’s top asset and wealth managers and leading industry experts.

Below are key highlights from their discussion.

Leaving outdated technology behind
Established asset managers continue to wrestle with legacy in-house systems to deliver and support innovative new solutions. As regulatory and client demands grow, so too does the need to operate at faster speeds.

Those companies looking to manage the cost base will find that their reliance on legacy systems will increasingly create a drag on performance. It will also create a need for tech teams with narrow skillsets to service outdated technologies, something that is impractical when you are trying to manage costs.

Fragmented data sets create a drag
Asset managers continue to grapple with datasets from multiple sources, affecting the latency and availability of data. Irrespective of sector, in private or public markets, fund groups will need to find providers who can bring datasets together to enable access to the data they need when they need it.

The prevalence of “home grown” legacy technologies throughout the industry has meant that many asset managers’ investment programs have stalled. Partnering with external specialists can quickly resolve this.

Embrace advancements in machine learning
Machine learning is already a recognized part of innovation playing out across the investment landscape. From incorporating artificial intelligence into valuations or assisting with data fragmentation, machine learning plays a central role.

The next advancement, according to the panel, is coming from natural language processing, which is helping with risk assessment, portfolio structuring and sentiment analysis. Having an outsourced partner who can bring together the various datasets to enable these innovations will be key in the years ahead.

Remain outcome-focused
Outsourcing to a new provider – or moving to a new tech stack – means that organizations must recognize that change often comes with a series of unintended bumps in the road. Therefore, the panelists claim, communication and management of expectations is key. When choosing to collaborate with a new partner, it is important to choose a team that has fully committed to that change and will help the asset manager to get there. Giannaros reaffirmed this point saying, “You need the fortitude to complete the job.”

Data quality is key
The final component in becoming future-ready, according to the panel, is pledging a commitment to data quality. Better quality data will ensure that clients get data in the right place at the right time. For asset managers, future success depends on having quality data that can be scaled. The days of unwieldy lists of numbers in spreadsheets will be consigned to the past.

Cloud-based technology, the use of application programming interfaces (APIs) and adopting a consolidated feed can support data quality by improving workflows and enabling outsourced partnerships. But stakeholders should recognize that the universal move towards data collaboration will mean a change to how we see ecosystems today.

“The data source can become the data destination,” added Giannaros.

For additional perspectives from Spiros Giannaros check out his “How banks are supplementing human expertise with AI to improve financial data quality" blog, and be sure to visit our Insights page for valuable State Street thought leadership.


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