The firms that succeed in the months ahead will leverage technology and scalable solutions to drive growth and reduce costs.
That's according to new research from Northern Trust, who argue COVID-19 has highlighted the potential of technology and outsourcing to reshape the global asset management arena.
Surveying 300 global asset management firms, Northern Trust found the most successful asset managers were adopting holistic "whole office" solutions for enhanced flexibility and alpha creation.
"Driving profitable growth beyond 2020 will require more than finding new streams of revenue or reducing costs," Northern Trust North America head of global fund services Ryan Burns said.
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"The most successful asset managers are rethinking their operating models from the perspective of their whole office, seeking holistic changes such as outsourcing that can help them grow their businesses."
By outsourcing non-core activities, such as trading, middle office, foreign exchange, data management and accounting, these asset managers are able to leverage internal resources to focus on core business activities; namely, distribution, portfolio management, research, risk and compliance.
The survey also found that asset managers were struggling to balance growth strategies with the burden of escalating costs and compliance obligations.
About 87% of the survey's respondents said their key strategic priority over the coming two years will be controlling costs, while 86% said they also plan to focus on risk, compliance and resiliency. Expanding into new markets was also a top priority for global asset managers, with 85% sighting this as a key focus area over the next two years.
To achieve these priorities, the survey found that asset managers plan to leverage new technologies (64%) and change their product strategies (55%), as well as considering merger and acquisition possibilities (41%) and outsourcing capabilities (35%).
Of those considering outsourcing over the next two years, the survey found that 45% were considering outsourcing their data management, while back office (40%) and middle office (38%) obligations were also key areas of opportunity.
"Asset managers today want true flexibility to choose the best partners for their investment processes," Northern Trust EMEA head of global fund services Clive Bellows said.
"For example, they want to be able to select an order management system, or a foreign exchange provider, or a trading solution that fits the way they work.
"Decisions that ultimately help drive alpha today are focussed on optionality and interoperability."
Asset managers have turned to outsourcing to help them optimise idea generation, market research, portfolio construction and technology, Northern Trust APAC head of global fund services Caroline Higgins said.
"Our clients' thought processes have been shifting," she said.
"They are proactively thinking of how to streamline and future-proof their operations and they have turned to outsourced providers who can help them leverage technology to suit their business goals and objectives.
"These providers can give managers access to digital tools that automate workflow and... facilitate self-service whilst providing the intra-day data and analytics they need for informed decision making."