- Research from State Street highlights the rapidly changing investment battlefield over the next three years
- More than three quarters of asset managers say they are embarking on a fundamental shift in their overall business strategy in response to changing client demands in the areas of innovation, distribution and front office solutions
- "To close the capability gap, the top areas of investment over the next three years will include risk analytics, performance analytics and data integration”
More than three quarters of asset managers say they are embarking on a fundamental shift in their overall business strategy in response to changing client demands in the areas of innovation, distribution and front office solutions, a report by State Street Corporation has found. The report titled, “Frontline Revolution: The New Battleground for Asset Managers,” highlights that although asset managers are overwhelmingly positive about the future, true success will be defined through investing in new capabilities, long-term investments and the right mix of talent, transformation and tools.
“Asset managers can have a clearer line of sight by preparing an arsenal of tools and capabilities to thrive in this more specialized and trying environment. That comes with transforming single asset products into fully serviced solutions.”
“Emerging from the financial crisis, asset managers have growth in their crosshairs,” said Joseph Antonellis, vice chairman at State Street. “Although nearly all of the managers surveyed are optimistic about business growth over the next twelve months, few believe they are well equipped to provide the solutions their clients need. To close the capability gap, the top areas of investment over the next three years will include risk analytics, performance analytics and data integration.”
Defending existing borders, but pushing new boundaries:
- 48 percent of survey respondents believe developing new products for their existing country markets offers the greatest growth opportunity followed by growing market share of their existing products within existing country markets (24 percent) and bringing in existing products to new country markets (20 percent)
- 42 percent will target growth from new client segments
- 32 percent expect to expand number of distribution channels
- 47 percent plan to expand into new markets over the next three years, and of these, 60 percent are focused on opportunities in Asia Pacific
Barriers to expansion:
- 85 percent say regulatory barriers are the top challenge when expanding into new markets
- 55 percent say distribution challenges deter them from expanding into otherwise attractive new markets
- 67 percent of respondents note that multi-asset solutions represent a major source of growth for their business over the next three years. This reflects the shift toward more outcome-based investment solutions for investors. However, 74 percent believe that few managers are equipped to excel in providing these solutions.
“More than ninety percent of respondents agreed that those managers offering the greatest degree of transparency will have the upper hand in attracting new assets,” continued Antonellis. “Asset managers can have a clearer line of sight by preparing an arsenal of tools and capabilities to thrive in this more specialized and trying environment. That comes with transforming single asset products into fully serviced solutions.”
To secure a competitive advantage, the report highlights how asset managers should hone their capabilities to achieve their full growth potential by:
- Mastering regulatory compliance, enhancing operational efficiency and focusing on enterprise-wide agility
- Upgrading the front office to support new growth segments and more complex multi-asset solutions
- Deploying advanced tools to deliver a more outcome-based perspective on investment risk and performance
- Identifying where the new solution set requires different skills and augmenting capabilities with the right blend of in-house and external support
State Street commissioned FT Remark to conduct a global survey of 300 senior executives at asset management firms from April – May. Respondents were equally distributed across North America, Europe and Asia Pacific and managed at least $5 billion in retail and/or institutional client assets.
To view the full report, click here.
State Street Corporation is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $27.5 trillion in assets under custody and administration and $2.4 trillion in assets under management as of March 31, 2014, State Street operates in more than 100 geographic markets worldwide, including the U.S., Canada, Europe, the Middle East and Asia.