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The Pandemic Drives Home the Value of Cloud-Based tools for the Asset Management community

Author Kevin O'Neill

With many Asset Management (AM) staff working from home due to COVID-19 lockdowns worldwide, AM firms have found cloud-based tools to be essential to business continuity.

During this period of uncertainty, Asset Managers have been forced to accelerate their digital transformation projects. The success of these projects depends ultimately on their ability to address the multiple operational and data management challenges that AM firms face on a day-to-day basis. But the benefits of migrating to the cloud far outweigh any reasons to delay.

AMs face mounting challenges. They are under pressure to streamline operations and cut costs, while they must also meet external challenges such as emerging digital-first B2C distribution models, digital first/challenger banks that can offer online investment options, changing customer demands, market volatility, and the impact of COVID-19.

Cloud solutions have been a big part of AMs day-to-day work worldwide in the last year and will continue to play a critical role going forward. Yet, AM firms’ cloud readiness varies significantly across the world. According to our research. two-thirds (65%) of AM firms worldwide are yet to complete their cloud readiness strategy.

Asia-Pacific (APAC) AMs lead the way, with 58% saying they have completed their cloud readiness projects and four in ten (40%) reporting that their cloud projects are underway. More than a third (37%) of AMs in Europe, Middle East and Africa (EMEA) have also completed their cloud readiness programs with 60% still in progress.

Interestingly, North American AMS are some way behind, with less than one in ten (nine percent) of AMs reporting they have completed their cloud readiness program. While the vast majority of US AMs’ (80%) cloud migrations are still in progress, just over one in ten (11%) of AMs in North America say they either have not started yet or do not have a cloud strategy at all.

Without a clear cloud strategy, AM firms risk missing out on critical business advantages, while losing business to more digitally progressive competitors.

The business case for cloud-based Asset Management

AM firms that use Software-as-a-Service (SaaS) solutions and other cloud tools are discovering numerous business benefits. From an operational perspective, cloud-based services provide cost savings as they reduce the need for on-site IT and software. SaaS solutions can also be scaled up or down easily according to users’ needs. This flexibility – both in terms of availability, scalability, and off-site IT support – empowers AM firms to be more productive and efficient in their day-to-day work.

In an increasingly competitive marketplace filled with digital-first challengers, asset managers need to provide an optimal client and investor experience. In North America, nearly one in five (17%) asset managers still use manual processes in their client onboarding, which can lead to errors, frustration and often cause potential new clients to look elsewhere for AM services. Cloud technology can help AM firms to improve their investor onboarding processes and customer experience significantly. The buy-side community has fallen behind on this front so it needs to explore how SaaS solutions can help them make up lost ground.

The transformative impact of COVID-19

According to technology analyst Aite Group, the adoption of cloud or SaaS-based platforms will only accelerate on the buy side, with more than half (55%) of respondents to Aite’s study saying they will very likely migrate to cloud-based risk applications post-pandemic.

Fenergo’s research finds that cloud tech is the second-leading focus of investment (58%) for AM firms after cybersecurity (63%).  In fact, 70% of Fenergo’s client implementations since January 2020 have been cloud-based compared to zero just two years prior to that. This acceleration is driven by the current displaced working environment.

How to complete your cloud migration

While many asset managers are committed to digital transformation, including the deployment of cloud-based solutions, the transformation process is clearly proving a challenge. Our research finds this is predominantly down to poor planning and a lack of ownership from executives.

To be successful with digital transformation and the adoption of cloud-based technologies, leadership is key. AM firms need to bring in the right talent and consultants, as well as research the right AM cloud-based solutions for their business.

The impact of COVID-19 has acted as a catalyst towards cloud migration. One-third of asset managers report that they have completed their digital transformation. They are already enjoying the benefits of improved efficiency, smoother client onboarding and simpler regulatory compliance. This gives them a significant advantage over their competitors, and will own them to thrive in a post-pandemic world.