Institutional investors are warming to the use of emerging technology to hit their growth objectives in a challenging market, according to a survey conducted by State Street.
The study of more than 500 global asset managers found that over 72% of asset owners expect to adopt a more defensive investment strategy and to slow their plans for expansion over the next five years.
Against this backdrop, there has been a significant shift in how survey respondents plan to adapt. Nearly half of respondents (48%) identified emerging technology as a top enabler of growth over the next five years. This represents a significant increase from the 2017 study, when just 18% of the poll thought that blockchain and artificial intelligence, would be a top enabler of growth.
The global survey also found that institutions want to improve their ability to extract better insights from data, with 58% of respondents naming this as a key focus area. Strengthening risk analytics was cited by 43% of the sample as a top outcome that their technology must deliver over the next year.
Liz Nolan, State Street’s chief executive officer for Eemea notes that the investment industry is in the midst of unprecedented change.
“Our clients face increasing complexity and regulatory expectations, as well as the need to upgrade technology and improve their data management; all the while carefully managing costs," she says.
For all the optimism about emerging technologies, just over two-thirds (61%) indicated they would take an incremental approach to IT change versus re-engineering their entire tech ecosystems. Furthermore, many firms are selectively seeking tech partners as a way to gain scale given the cost involved with an architectural overhaul.
In the UK, integrating new technologies into existing infrastructure and processes is reported to be the biggest challenge, (62% versus 45% in the rest of Europe). As a result, an increase in acquisitions and partnerships could have the potential to reshape the investment management industry believes State Street, with more than half (53%) of respondents looking at established technology companies to support the development of new solutions.
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