Marching to a Different Beat: Architectures and IT Sourcing Options for Asset Managers

by Jay Wolstenholme, May 5, 2017
Product Trends/ Reviews
Global

Abstract

As investment strategies become more sophisticated, diverse, and under stricter regulatory reporting requirements, operations and technology need to keep up.

Celent has released a new report titled Marching to a Different Beat: Architectures and IT Sourcing Options for Asset Managers. The report was written by Jay Wolstenholme, a Senior Analyst in Celent’s Securities & Investments practice.

With more than 6,000 global asset managers ranging from $100 million assets under management (AuM) to $4.5 trillion AuM, firms have diverse investment mandates and objectives. Their portfolio investment tools need to properly match the analytics, monitoring, trading, and portfolio management capabilities required for investing and effectively reporting to clients and regulators. The easy trap for asset managers to fall into is not accurately matching operations and technology to their actual business and investment requirements.

It is fair to say that the asset management business has historically underinvested in technology, but has been able to survive because of decent returns. This is no longer the case, and asset managers realize they need to upgrade, but now the trick is not to be undersold or oversold.

Once the decision is made that reengineering is a business necessity, the choice then turns to how to source and implement it. This is where the buy side has a great advantage through web hosting, cloud options, and superior technology. Capital costs can be reduced by use of annual licensing pricing plans, and asset managers can access secure, best-of-breed, and cost-effective solutions.

“As asset managers diversify investments and strategies become more sophisticated and under stricter regulatory reporting requirements, operations and technology need to keep up if firms are to stay in the competition,” said Wolstenholme.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

3

 

Key Research Questions

4

Buy Side Categorization by AuM

5

 

$250 Billion to $4.5 Trillion

5

 

$100 Billion to $250 Billion

5

 

$30 Billion to $100 Billion

6

 

$10 Billion to $30 Billion

6

 

Less than $10 Billion

6

 

Special Note on Hedge Funds

6

Three Technical Asset Management Architectures

8

 

Large Asset Manager ($100 Billion to $4.5 Trillion)

8

 

Midsize Asset Manager ($20 Billion to $100 Billion

11

 

Smaller AMs (< $20 Billion) — The Move to Cloud

12

Asset Owner Technology Options

14

 

The Cloud

14

 

Cloud/Remote Offerings for the Buy Side: Starting from the Beginning

14

 

Vendor Sourcing Options

16

Conclusion

17

Leveraging Celent’s Expertise

18

 

Support for Financial Institutions

18

 

Support for Vendors

18

Related Celent Research

19

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