The “Asset Management Industry Outlook 2023” from AutoRek provides some interesting insights into the strategic priorities, operations, technology and regulations focused on the UK asset management sector.
AutoRek carried out a survey of almost 250 professionals across a variety of asset management organisations and found that despite the growing assets under management in the industry, the vast majority of firms reported to be “somewhat profitable”. Interestingly, most of the firms reported to having invested in technology for finance and plan to continue this trend in 2023. Spreadsheets are, however, still prevalent for financial controls, specially within older firms and therefore finance departments have received significant investment over the last two years to overcome the in-efficiency of spreadsheet-based activities. The drive for more sophisticated technology and higher levels of automation offers many benefits, from better governance, data control and enhanced overall efficiency.
Survey respondents reported that over the last two years, customer experience, acquisition and retention has been the biggest priority followed by “ensuring profitability”. We believe the profitability of an asset management firm is directly related to the effectiveness and efficiency of the finance function and the underlying processes.
A separate survey from Oliver Wyman on key trends in the asset management industry also highlighted investment in technology as a means of cutting costs, improving efficiency and reducing manual processes. The Oliver Wyman report also highlights that diversified asset managers are sometimes running over 300 apps which not only are expensive to maintain but add to the operational complexity.
Automation and integration of sophisticated new technologies can only be successful if processes are also diligently transformed and adapted. Investing money in technology and hiring finance experts on their own may not lead to better outcomes unless it is combined with a full understanding of existing financial processes and a plan around intelligently integrating new tools.