Key Drivers of the Global Investment Industry: 9 Trends We’re Watching
Following SS&C Eze’s Best OMS win at the Water’s Buy-Side Technology Awards at the end of 2020, our 5th win in the category, which, according to Waters, is "traditionally one of most competitive categories of all 36 on offer," I sat down with Victor Anderson from Waters Technology to discuss the challenges, opportunities, and key forces SS&C Eze foresaw driving the global investment management industry in 2021. As we are now more than halfway through the year, we wanted to provide an update on how these and other industry trends have progressed and how we predict they will continue to evolve throughout the rest of 2021 and beyond. For a more in-depth look at SS&C Eze’s trend forecast, download our whitepaper, Key Drivers of the Global Investment Industry: 9 Trends We’re Watching.
Cybersecurity Continues to be of Concern for Investment Managers and Investors Alike
Investor concern surrounding cybersecurity has only intensified with COVID-19 and the rise of remote work environments. More and more investors are asking investment managers about the security and resilience of their platforms, policies, and procedures.
Moving forward, managers will be pushed to prove, through third-party certifications and other such measures, that they have taken the necessary steps to ensure that they are cyber resilient, and that they are holding the vendors supporting the systems and services they operate on to the same standard.
Shifting Demands: Managers Want More Modernized Technology
Over the past couple of years, the industry has experienced an unprecedented shift in investment managers' technology demands. Market volumes, volatility and increasing fee pressure is causing many firms to reevaluate the systems they operate on, many of which have become expensive to maintain and costly to upgrade; other firms have grown tired of tolerating overly manual processes and clunky workflows.
Modern managers require modern solutions that can adapt to their changing situations. They want solutions that offer the scalability, configurability, and flexibility they need to optimize their investment activities of today and tomorrow, as well as handle extreme volatility.
Continuing Demand for Trustworthy and Secure Cloud and Mobile Technology
Demand for cloud and mobile technology is at an all-time high. In a remote and uncertain work environment, the ability to access the systems you operate on is imperative. Users want technology that is delivered quickly, updated regularly, and easy-to-use and adopt. With cloud hosting and frequent or even continuous feature updates, users can fully utilize their systems and optimize their processes from home, with no lost efficiency.
Increased Regulatory & Investor Due Diligence Requirements
With investor due diligence requirements increasing in tandem with regulatory requirements, and the additional challenge of conducting due diligence virtually over the past year, investment managers have discovered the importance of employing systems that are adaptive, can scale to meet the requirements of ever-shifting regulatory and investor mandates, and that differentiate them from the competition.While face-to-face meetings are returning in many parts of the globe, the impact of this time period on investors’ technology expectations will remain.
Continued Fee Pressures Drive Desire to Consolidate Vendors & Simplify Operational Landscapes
As they face these increased regulatory and investor requirements, asset managers are seeking to rationalize the number of outsourcing relationships they have in the interest of minimizing risk, simplifying their operational landscapes, and decreasing total cost of ownership. As a result, many vendors are claiming to be a ‘one stop shop;’ however, this means something different for every vendor and every client. Ultimately, those providers that offer both comprehensive technology and other operational solutions, like managed services, that maximize client time spent on top-line revenue growth, have emerged as leaders in this arena. We expect to see demand for and emphasis on these types of multifaceted solutions continue to grow, as well as increased emphasis on not just the breadth, but the depth of the technological functionality providers offer.
Continued Popularity of ESG Investing
Between increasing demand caused by shifting investor demographics and the positive performance firms are experiencing with these types of strategies, the demand for environmental, social, and governance (ESG) integration into investment portfolios has never been higher. Fund managers that have laid the groundwork to manage ESG mandates by automating and integrating it tightly with their process will ultimately be a step ahead of their competitors.
Start-Up Activity Hasn’t Stopped
At SS&C Eze, we saw many of our hedge fund clients experience exceptional fund performance in 2020. For many active investment firms, increased market volatility is good for business which explains why we have seen an increase in start-up hedge fund activity.
At SS&C Eze, we’ve seen this trend first-hand. Throughout 2020, 45 start-ups signed on to launch their funds on SS&C Eze platforms, and this momentum has continued in 2021, with 25 clients signed on to grow their new fund with SS&C Eze so far this year. Explore SS&C Eze's Emerging Manager Front to Back Solution.
Increased Collaboration Among Global Teams Will Spark Innovation
One of the most surprising changes we've seen over the past year is increased and improved collaboration, especially for global teams, which will undoubtedly lead to exciting new initiatives and innovations across the industry.
At SS&C Eze, we found the adoption of video conferencing has led to increased and improved collaboration internally and with clients and partners, and we’ve had deeper, richer, more productive discussions than ever before. For clients, this means an even stronger client-vendor partnership as we can more easily connect with key stakeholders, more quickly implement feedback into our product roadmap, and more effectively make adjustments, whether from a client service or product perspective. Although in many ways the pandemic has underscored the value of face-to-face connection and many of us are eager to return to in-person collaboration, the productivity gains we saw with virtual collaboration are undeniable and will likely last well beyond the pandemic, changing the way we work and partner together forever.
The Future of Investment Management is Open & Connected
The industry is constantly and rapidly evolving. To keep up, firms need technology that’s not only elastic enough to stretch to meet these growing and shifting demands; but that takes it a step further—forging seamless connections across more systems and partners. These investment technology ecosystems will deliver value far beyond the benefits of any one system, offering investment managers a more holistic view of their firms and opening the door to the actionable insights they need to be their most effective.
Michael Hutner serves as senior vice president, general manager of SS&C Eze and is responsible for running the SS&C Eze business and SS&C’s Financial Markets Group worldwide.
He joined the company in 2000 and was responsible for the launch of SS&C Eze’s New York operations. He has held numerous leadership positions across sales, business development, and marketing. Most recently he oversaw global marketing and sales for SS&C Eze’s award-winning investment management solution Eze Investment Suite and its next-generation platform Eze Eclipse.