As we prepare for our journey into the new year, the FundGuard team has been taking stock of 2023, while casting our sights forward to 2024 with enthusiasm and readiness.
For this final blog of the year, we are pleased to share what our diverse team of thought leaders have deemed the most notable surprises of the year and what we can expect from the dynamic world of investment operations in 2024 and beyond.
Cloud adoption, operational transformation and AI rapidly accelerate, yet some firms continue to sit on ever-growing tech debt in the middle and back office…
Our regularly featured blog contributors, with their fingers constantly on the pulse of industry change and technological innovation, witnessed firsthand the surprising trends and shifts that have come to define the global asset management industry. Here are their reflections from the year.
“There still remains a band-aid approach to fixing operating models at many large asset managers and asset servicers, even though the technology is now available to help them move towards a more efficient model. While we saw the advancement of AI move to the next level and will continue to see that going forward, there are still foundational elements like the use of Excel, mainframes and antiquated reporting technology that have run their course.”
–Greg Farrington, Sales Director, FundGuard
“While many firms are now on or planning to soon begin their transformational paths, it is surprising to see the continued ‘wait and see’ approach of some large asset managers and asset servicers who are still managing significant amounts of assets on outdated technology and operating models. This will continue to pose considerable risk for their clients and their own firms, threatening future growth and even the very existence of their business.” -Antony Slee, Sales Director, FundGuard
On the other hand, we’ve been pleasantly surprised by some firms’ unprecedented acceleration of trailblazing technology adoption and very clear and proactive paths to transformation…
“Far more firms have come forward with clear paths to transformation, and RFPs are rolling in from across different consultants and different regions. This surprisingly rapid acceleration of on-prem software transformations compared to past years stems from multiple different drivers, including demand for cloud upgrades and realization of TCO, plus alternative managers and their service providers who also want to migrate and future-proof.” -John Lehner, President, FundGuard
“After years of discussion the industry took a very visible turn toward proactively seeking to change the underlying technology used in asset management and asset servicing – solving for the root cause of long-maligned data management issues and cost challenges. Clarity on the value of true cloud-native technology over cloud-enabled “stacking” has crystallized. It is especially great to see AI and Machine Learning becoming a reality for the industry.” -Alan Schneider, Partnership Sales Director, FundGuard
Acceleration of new tech adoption, more and more M&A, ongoing outsourcing and increased cybersecurity scrutiny…
As much as we learned from the past year, we’re equally excited about what 2024 holds. The investment operations landscape is evolving at a breakneck pace, driven by long-awaited acceptance of technological innovation, ever present regulatory changes, and shifting investor priorities. In the following statements, our team offers their predictions for the trends and challenges that will define the coming year.
“M&A activity in financial services and the consolidation of mid-market players will accelerate, driving further disruption of operating model changes already in flight. We’ll also see the outsourcing trend continue with large asset servicers continuing their modernization efforts to stay competitive and win new mandates.” -Greg Farrington
“We’ll see continued M&A activity across asset managers and asset servicers, driven in large part by factors such as the shift to alternative asset classes. We’ll also see a continued shift towards cloud native, AI & Machine Learning technology models. This will accelerate as firms look to scale, reduce costs and attract new clients – all while tackling the rise of unstructured data and regulatory demands. Lastly, I have no doubt we’ll also see increased regulatory scrutiny on cybersecurity, with calls for increased regulation and tighter controls. This will remain in the top three priorities for firms for the foreseeable and will directly impact budget allocation and due diligence processes across the value chain.” -Antony Slee
“More and more technology support for alternative asset classes will emerge, AI and Machine Learning initiatives will skyrocket, and the asset management value chain and distribution focus will begin to shift as the focus on wealth management and high net worth channels continues.” -Kirk Littleton, Sales Director, FundGuard
“The increasing accessibility of tailored direct investing tools at major brokerage firms will have a significant impact for asset servicing firms and exponentially increase the technology requirements for their investment accounting platforms. Further, the era of Big Data will solidify its way into the investment accounting platforms serving the financial services industry. While incremental patches to outdated platforms have been considered prudent in the past, the marketplace has now vetted and adopted new big-data solutions, and have come to understand that the replacement of core accounting engines will be a means for survival.” -Peter Muldoon, Product Strategy Director, FundGuard
“I’d expect to see a more concerted effort and more cross-collaboration within the industry to productionize distributed ledger technology. The ongoing rise of digital assets and the tokenization of traditional assets should be further incentivizing the industry to adopt DLT, and as the technology matures and the regulatory landscape becomes clearer, we can expect to see more initiatives and partnerships aimed at leveraging DLT’s transformative potential.”
“Adoption of modern technologies will continue to accelerate, especially in the middle and back office where ops-focused machine learning will hit its stride. I suspect the hype potential of GenAI will max out in asset servicing, but it will continue to roll-out for asset managers supporting distribution and investors.” -Alan Schneider
All in Good Fun
“Off-the-charts-expensive” concert tickets + believe-it-or-not sports surprises…
Sure we’re serious technology innovators and industry visionaries, but from live music to die-hard sports allegiances, we have other interests too! Here are a few fun outtakes from our roundup of surprises and predictions. Enjoy!
“People were paying well over $1,000 per ticket to see some of their favorite acts this year (you know who!), and in general the average concert ticket price is now sitting at $250 per seat. Is this sustainable for the average concertgoer?”
“Shocked to see the Spurs at the top of the Premier League for so long…although normal business has since resumed!”
“Giants vs. Jacksonville in the Super Bowl. Mark my words!” -John Lehner
Now What: From Traditional to Transformational
Partnering with the industry to deliver the new era investment accounting utility…
FundGuard’s cloud-native, AI-powered platform is empowering firms with the core technology and single source of investment accounting data required to boost efficiency and scale investment operations in 2024 and beyond.
As we enter the new year, we’ll continue to share more deep dives into vital insights on investment accounting, modern investment operations and innovative technology from not only our own SMEs, but from across FundGuard’s ecosystem of clients and partners. So be sure to stay tuned to the FundGuard Insights blog and our LinkedIn channels for the latest thought leadership.
We also invite you to subscribe to our weekly or monthly round-up emails, where we’ll deliver current content directly to your inbox.