Institutional asset managers are looking to cloud solutions as they seek to find economies and streamline their asset management processes.
Taking advantage of new digital technology that can help them meet changing client demands in an evolving financial landscape, these firms have been prompted to look to the cloud as creaking legacy infrastructure limits their transformational capabilities. The findings, contained in a report by data servicing company Arcesium, indicate also that asset managers are finding it difficult to make the leap on their own and are enlisting the help of third-party expertise.
Data Management
Institutions have been eagerly seeking to harness the powerful capabilities of digital processing to automate many of their functions, particularly in the back office but also in other parts of the enterprise. They’ve been drawn to digitalisation by a combination of slowing business, compressed fees and rising costs. A survey by PwC in 2022, for instance, found that institutional asset managers’ average operating expenses surged by more than a fifth.Automation requires good data and while firms realise this, many have found that they lack the technology or expertise to incorporate it into their systems and, more problematically, are unable to manage it properly.
Without good management, data cannot be optimally ingested, accessed or utilised. Achieving this is a pain point for many companies. In a recent A-Team Group survey of 29 senior buy-side enterprise data management (EDM) executives, 62% of respondents said improving data quality was key to delivering their firm’s target of improving the bottom line. Meanwhile, 83% suggested that better data management would provide greater value in terms of supporting business decision-making.
With their own tech stacks often incapable of meeting the new data challenges, institutions have been turning to the cloud. There, near-unlimited compute and storage capabilities offer opportunities for firms to enlist data management expertise at scale. Arcesium is among the companies that are providing such services to asset managers.
“Migration to a modern, cloud-based platform offers enormous benefits to institutional asset managers and many have already made the leap,” the report, titled “Transforming Investment Management: The Urgency to Modernize Platforms” states.
Virtuous Cycle
Cloud-hosted data management solutions provide institutions with the flexibility and agility to scale their operations, reduce process costs and break down silos that hamper the free-flow of data.
Describing the outcomes of freeing firms from their legacy stacks as a “virtuous cycle”, the report states that each benefit of moving to the cloud provides a foundation for further improvements.
“The multiple benefits of cloud migration from a legacy setup feed into and nurture each other,” it states. Among those benefits are also access to seamless integration with cloud-native tools and advanced analytics, all protected by robust security and integrity frameworks.
The report warns, however, that cloud transformation “is by no means an easy task and requires careful planning and expertise to ensure the right data is migrated correctly”.
“Without that, weaknesses within the data held on-premise may be simply relocated into the cloud environment, potentially replicating some of the drawbacks that prompted the switch in the first place.”
Examples of challenges firms have faced, including some cited in A-Team Group surveys, include the complexity of migration, a lack of clarity offered by cloud operators and the risk of higher costs from improperly managed data.
The Arcesium report stresses, however, that services such as its own Aquata can remove those hurdles and make migration seamless.
- The report, published by A-Team Group, can be downloaded from here.
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