Challenges and Opportunities posed by new technology
Over the last decade, digital has become mainstream. Distribution models have evolved and disruptors have attacked the most profitable parts of the industry. Technology startups are nimble and don't have the legacy issues (or costs!) of incumbents. Consequently, industry margins have been squeezed as significant investment in new technologies is essential, while fees and other sources of income have come under pressure through efficiencies or automation.
This collection of papers outlines several of the challenges the investment industry faces, whilst also showcasing how technology can have positive outcomes. These include: more detailed analysis of data in the investment process, enhanced distribution of product and information to customers, and efficiency gains through digital regulatory reporting.
State Street surveyed over 100 asset managers to get their views on the year ahead. Information technology issues featured prominently, more than half anticipated integrating distributed ledger technology (DLT) into trading processes, and a similar number expected DLT and tokenization of traditional assets to improve financing, operational and risk management returns.
Deloitte investigates the challenges facing investment management firms and finds those willing to 'cross traditional boundaries' by upgrading technology to reimagine growth, operational efficiencies, and client experiences are more likely to succeed.
Capgemini outlines how 'quantamental' investing approaches and digital security tokens are going to impact aspects of asset management, and how the adoption of data-driven compliance will ensure standards in the use, distribution, and protection of valuable customer data.
The Investment Association sets out, in this policy report, the key elements that are driving the investment industry and critical actions that are necessary to achieve good outcomes. Technological change is seen as being revolutionary-transforming every aspect of the industry from investment decision making to client experiences
McKinsey & Company suggests that as insurance companies allocate significant resources to technology functions, they need to ensure that other parts of the business adapt and change too.
Hermes IM examines the arguments both in favour and against the application of artificial intelligence (AI) in asset management, banking and insurance.
This CFA Institute report seeks to identify high impact applications of artificial intelligence (AI) and big data in investments. Somewhat surprisingly, they find that relatively few investment professionals are currently exploiting AI and big data applications in their investment processes.
Deloitte explores how the role of technology in asset management is changing the worldwide distribution of good and services and outlines four key considerations for the asset managers of tomorrow.
In this paper, PwC outlines the accelerating pace of technological advances across financial services, analyses its implications and risks, and makes suggestions as to how businesses may best adapt.
Deloitte and the World Economic Forum combine to provide a high-level overview of how privacy-enhancing techniques work and how they can unlock value across a range of financial institutions, including asset managers, banking and insurance companies.
For compliance reasons, this paper is only accessible in the United States
BlackRock outlines four key lessons about making the most effective use of advanced technologies to analyze 'Big Data' within an investment process.
In this paper by Man AHL, they highlight how machine learning can play several beneficial roles in investment management, where there are big data sets to profitably mine. They note that an 'ESG factor' may indeed exist!
Kevin Zatloukal of O'Shaughnessy Asset Management demonstrates how machine learning can be successfully applied to help build a value investing strategy that has delivered consistent outperformance over two decades.
Xtiva notes how digital technology is transforming almost all aspects of the investment and trading environment, while also transforming and disrupting the business models of the wealth industry. This collection of industry participant insights showcases the many and varied ways in which technology can and is affecting the wealth industry.
The Economist Intelligence Unit (EIU) surveyed over 300 investment institutions located in Asia to find out the degree to which artificial intelligence (AI) is being deployed, how it is used and what further capabilities it may have in aiding the ESG decision making process.
The authors note the rise of digitization and datafication and new technologies in financial markets, and argue that cybersecurity and technological risks now pose significant threats to financial stability and national security. They suggest basic principles of how such risks can be monitored and addressed, and focus on the role of regulatory technology (RegTech).