Poll casts spotlight on industry's heightened ESG focus, security challenges, and growing AI adoption
Since last year, disruptions caused by COVID have thrown up operational challenges for asset managers across the world. But rather than conceding defeat, the majority of the industry has taken it as an opportunity to adapt and transcend their previous limitations.
In the 10th wave of its Global Asset Management Survey Report, which comes two years after the previous edition, Linedata worked in partnership with Aite Novarica, a leading financial services insights and advisory firm. They took responses from 200 asset managers, hedge funds, fund administrators, and other members of the asset management industry in Europe, North America, and Asia.
Among other key findings, the survey revealed two thirds of respondents (67%) are prioritizing ESG integration into their investment framework. Their efforts include creating a centralized ESG team (46%), getting scores from an ESG rating company (43%), and becoming affiliated with global and regional sustainable investing organizations (42%).
However, 30% of respondents said ESG integration into portfolios is a lower priority, citing reasons such as lack of client demand (33%) and lack of industry standards (31%).
With the acceleration of digital adoption in financial services, 35% of firms said the threat they were most concerned about was the potential impact of cybersecurity on their business, a drastic change from the 2019 survey where it wasn’t even a top three concern. Other top risks included managing risk (29%) and vendor oversight (26%).
Significantly, the survey found around three fifths of respondents (62%) agreed that use cases for machine learning and artificial intelligence have risen year-over-year. Those with the highest adoption rate focused most prominently on regulatory know-your-client and anti-money laundering requirements (70%), followed by portfolio and risk analytics (69%).
When it comes to options for differentiation, firms are looking at a wider range of unique propositions. A fifth cited risk management (20%) or investment performance (19%) as their key differentiator, followed by transparency (16%), innovation (12%), and cost structure (10%).
“Over the last two years, asset managers have had to reprioritize their business operations and make a dramatic shift that focused more on innovative options, risk management solutions and creating a greater sense of transparency with employees and clients,” said Gary Brackenridge, Linedata’s global head of Asset Management. “As we look to continue successfully navigate the changes to come, we must focus on integrating solutions into portfolios that align with organizational and customer values.”
