Investment management firms must maximise technology if they are to add value to their businesses, SEI has warned.
In its white paper on buy-side infrastructure, it characterises the current period as transformative, dominated by the conflicting trends of returning economic growth and uncertainty, and suggests outsourcing can help asset managers adapt.
It says outsourcing creates operational efficiencies that allow firms to focus on adding proprietary value.
“While assets under management, investor demands, and regulatory requirements are all still growing, overarching uncertainty has discouraged firms from similarly expanding their resource allocations,” said Jim Warren, head of solutions for SEI’s investment managers service division.
The paper, based on interviews with executives of investment management firms, covers topics including current buy-side technology initiatives, driving forces behind business and budgets, and the changing attitudes towards buy versus build.
SEI stated that the resulting budgetary immobility made the efficiency of technology initiatives ever more important in achieving growth and that the current environment supports the trend toward outsourcing back- and middle-office functions to create that efficiency.
“It’s no longer a decision of ‘buy versus build’ for investment managers, it’s become ‘partner or perish’” Warren added.
Executives interviewed also identified reporting and data management as the most desired technology initiatives. They believed that having clean and consistent data throughout the pre- and post-trade life cycle would offer advantages over their peers.
Despite a large selection of available service provider solutions to choose from, many executives admitted to struggling with the trade-offs between longstanding or emerging technology, best-of-breed or integrated solutions, and which providers would potentially be the best long-term partners.
“Selecting the right service provider can be a drawn-out experience, and it’s important to choose a provider that clearly adds value, one you consider a true partner,” said Ross Ellis, vice president of the knowledge partnership for SEI’s investment manager services division.