Technology’s Role in the Future of Investment Management
Investment Management has become more automated, more data-driven, and more transparent due to technological innovation. Finance and technology are now interlinked, creating the new frontier of fintech. As the landscape becomes more complex and options proliferate, investment management technology has a significant role to play in all firms, whether they are large or small.
Technology in investment management has been a driver for greater productivity and better outcomes, and leveraging it provides a competitive edge. So, where is this heading, and what do you need to know about investment management software?
The Effect of Technology on the Future of Investment Management
While technology in financial markets has existed for more than 50 years, the industry is at an inflection point. Many fund managers and their operation teams are making hard decisions about technology investments dealing with legacy systems for portfolio management and trading, as well as technology maintenance or migration. It’s a challenging decision to balance getting rid of the old and welcoming the new. The way forward from an industry standpoint is migrating to a cloud-based and data-ready architecture.
Three of the top disruptive components fueling the future of investment management technology are the cloud, data analytics powered by application programming interfaces (APIs), and artificial intelligence (AI).
This trio represents emerging capabilities. Each offers possibilities for the future of investment and asset management. The cloud can be a secure, scalable, and flexible home for data. APIs connect disparate systems that contain crucial data, and AI drives the analysis and insights from this data.
The growth and ability of data also support the opportunity to shift technology frameworks. Evaluating data with algorithms to find patterns, trends, and insights enables stakeholders to make more informed decisions and identify signals around them that can reduce risk.
The platforms in place to usher in the effect of technology are growing. Global spending will reach $1.67 billion by 2030, with a compound annual growth rate (CAGR) of 5.09%.
The outcomes of implementing this robust platform represent tremendous value.
The Value From Investment Management Technology
The value derived from technology in investment management is and will continue to transform the environment. The benefits include reduced costs, increased efficiency, greater personalization, and effectiveness.
Some of Technology’s impact on investment management includes these opportunities:
- Reducing tech costs by adopting purpose-built platforms: Attempting to build your own investment and asset management technology is a considerable undertaking. Those on this path can expect to spend high costs on development, hosting, and more. You can reduce your tech budget using trusted, secure, and proven solutions that ensure tech costs are on your operating, not capital expenditures.
- Automation advancements drive efficiency: The progress on this currently is via robotic process automation (RPA), which includes digital “robots” that can take over rules-based, repetitive tasks. Going forward, this will broaden, with AI added to these robots that can complete more complicated workflows requiring some decision-making. This will not eliminate the need for human intelligence but rather augment it.
- Personalized investment recommendations: Based on data analysis on conditions and an investor’s risk profile, algorithms will be able to deliver more customized investment advice.
- Real-time data analysis and proactive alerts deliver more effective processes: With investment management technology, you can access this information to stay ahead of the competition. The alerts allow you to guide user workflows to respond to situations at the priority necessary (e.g., immediate or future attention).
In looking at the possibilities of technology in asset management, you’ll also want to be aware of the upcoming trends.
Upcoming Investment Management Trends
As you plan for the future and how you’ll utilize technology, be aware of these investment management trends.
- Digital transformation remains a top priority: Investment firms have been on a digital transformation trajectory for some time. The pandemic forced many to accelerate timelines, and 60% of executives stated it was the most critical growth driver in 2022. You need the right technology to deliver efficiency and effectiveness to achieve digital transformation goals. It will include decommissioning legacy systems and migrating that data to the cloud and new platforms. Doing so enables you to run a leaner tech stack that simplifies and streamlines.
- Rethinking data strategies: In many firms, the barriers around actionable data involve silos and quality issues. Data that’s disconnected must be aggregated to enable better decision-making. It also needs a quality check to determine if it’s accurate and relevant. You’ll need to define standards and governance around data for it to be useful.
- The need to be agile as risk and volatility persist: Any investment firm needs flexibility, as many factors impact your business. Economic uncertainty, inflation, geopolitical instability, and other factors continue to alter outlooks. It’s another reason why you need investment technology software. With it, you can be proactive, not reactive.
- Cybersecurity remains a threat in the financial space: Any organization in this sector is attractive to cybercriminals. In fact, 55% of financial institutions experienced a ransomware attack in 2021. Hackers are opportunistic and have advanced techniques to breach systems. To combat this, you need a robust cybersecurity program that includes vulnerability assessments, intrusion protection systems, and regular penetration testing. The applications you use, like investment management software, should have security and compliance interwoven into their foundation.
Navigating these trends is possible by transforming your organization with technology.
Transforming Your Organization With Asset Management Technology
Feature-rich, intuitive, and cloud-based technology in asset management will give you the tools you need to be future-ready. You can achieve this with INDATA’s SaaS-based solutions for OMS, Portfolio Management, and Portfolio Accounting delivered via INDATA’s iPM Private Cloud. This secure and reliable investment management technology solution can support you in today’s fast-paced and dynamic markets. INDATA’s SaaS solutions can be accessed from anywhere, scale needed, and have the ongoing functionality you need to make effective data-driven decisions. Our software is guiding the way forward with improvements in efficiency, performance, risk reduction, and increased transparency, all while reducing costs.
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