Information technology (IT) - Next game changer for investment managers

Article

Information technology will be the next game changer for investment managers

Investment management organisations are struggling with their day-to-day operations, as the industry faces the challenges of a constantly changing market, regulatory and technological landscape.

Executive summary

In our earlier publications, we explained the impact of new regulations, such as Solvency II (applicable to the insurance sector), which is having a major impact on investment managers. These enhanced regulations require investment managers to modify their operational procedures, also known as ‘trade cycle management’. They have to deliver increased transparency, demonstrable risk-based modelling, improved look-through reporting and other complex functionalities.

All these challenges, which are handled under pressure and may impact on operational excellence, have led to many organisations evolving a complicated and errorsensitive technological architecture. The well-known software vendors seem to be finding it increasingly difficult to anticipate change and adapt their off-theshelf solutions to the functional challenges of the market. This new environment can produce the kind of
data-related incident that impacts on financial results and/or investment decisions and distracts investment management organisations from their key objective: meeting their clients’ (financial and/or pension) needs. Moreover, the price of primary software packages and the costs involved in maintaining and supporting the required infrastructure (operating systems, databases and transportation platforms) have been increasing over the last decade. 

The cumulative impact of these developments has inflated IT budgets to a level often considered to be unacceptably high, resulting in multiple cost reduction programmes. Such programmes have forced IT departments to manage an increased amount of work on a lower budget, with the resulting pressures making organisations more inflexible and unable to take opportunities to introduce innovation or improvement.

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Performance issue 16 - January 2015

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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