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Saturday 26 May 2018

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European AMs opt for automation as top cost-saving strategy

Written by Talya Misiri
15/05/18

European asset managers are opting for automation as their top cost-saving strategy in 2018, SimCorp has found.

According to SimCorp’s new WBR Insights European report, Buy-Side Operations: Cutting through Complexity, asset management firms are strategically addressing operational and data issues to reduce the cost of operations.

A total of 91 per cent of heads of operations in Europe are reducing manual processes via automation and 67 per cent are consolidating their systems do lower their firms’ cost to income ratio. As a result, developing technologies such as artificial intelligence and cloud strategies are “trailing at the bottom of the list of investment priorities”, SimCorp noted.

Placing less emphasis on fintech innovations, 81 per cent of buy-side firms noted that overhauling their legacy systems was the top strategic priority for 2018, with increasing concern among asset managers and institutional investors over cost control.

Nonetheless, buy-side operations are struggling to provide access to non-traditional asset classes in a cost-effective way, the report found. Across Europe, private debt, 59 per cent and alternatives, 51 per cent, were signposted as the most costly and challenging asset classes to manage. The most popular alternatives among European firms include private equity, infrastructure and hedge funds.

Moreover, while threats from non-traditional competitors like Amazon and Google are joining the market, only 36 per cent of European buy side are concerned about disruption from these competitors.

SimCorp senior vice president and managing director, UK, Middle East and Ireland, Stephen Butcher commented: “The report makes it clear that the current status quo in investment operations needs to change fast. In today’s margin-pressured environment, buy-side firms must reduce their operating costs to compete effectively. Cutting through the complexity and consolidating investment data is key to this goal. Simplifying operations in this way will not only reduce a firms’ costs and risks, but more importantly will deliver the innovation that is vital in the search for returns and competitive edge.”

The research, which was commissioned by WBR Insights and commissioned by SimCorp, surveyed 100 European heads of operations with over €20bn in AUM across the UK, France, Germany and the Nordics.



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