Global asset managers bet on emerging technologies to meet growth targets

State Street survey finds that 68% of institutional investors are concerned about hitting growth targets in the current market climate.

Asset managers are looking to emerging technologies to tackle concerns about hitting growth objectives within the current market environment, according to a survey carried out by State Street.

State Street polled more than 500 global asset managers, asset owners and insurance companies to understand what they believe to be barriers to growth, with 48% of respondents labelling emerging technologies, including blockchain and artificial intelligence, as a ‘top enabler of growth’ over the next five years.

The results showed a significant increase from State Street’s 2017 survey, where just 18% of respondents thought that new technologies would be a top growth enabler.

“As this survey further demonstrates, the investment industry is in the midst of unprecedented change,” said Liz Nolan, State Street’s chief executive officer for EMEA. “Our clients face increasing complexity and regulatory expectations, as well as the need to upgrade technology and improve their data management; all the while carefully managing costs.”

However, the survey also found that respondents are cautious about engaging with emerging technologies as 61% stated that they would take a more incremental approach to embracing it, compared to re-engineering their entire IT ecosystems.

UK asset managers appear to view integrating new technologies with existing infrastructure as a bigger task than other asset managers, with 62% based in the UK agreeing it is the biggest challenge associated with the implementation of new technologies, compared to 45% across the rest of Europe. The integration of new and legacy technologies has proven a significant stumbling block to buy-side firms as innovation continues to outpace the industry’s ability to absorb the pace of change, as well as placing further burdens on buy-side resource budgets.

To combat the challenge, more than half of respondents added that they are looking at established technology vendors to support the development of emerging technologies, as State Street concludes that acquisitions and partnerships have the potential to reshape the investment management industry in the future.