Fund managers say technology will drive change as pressure builds on ESG

Technology will be a key driver of change in the asset management industry over the next several years, according to senior executives, especially as pressure builds on how sustainable investments are reported.

Financial news sent a series of questions to executives of companies shortlisted for our 2021 Asset Management Awards to get their thoughts on the trends shaping the industry. New technologies such as artificial intelligence, machine learning and language processing have been among the biggest disruptors identified by CEOs.

“Technology is the last battleground for our industry today and will be a key differentiating and disruptive force for our industry,” said Valérie Baudson, CEO of Amundi.

She added that asset managers need to invest in innovation and human capital to take advantage of the opportunities offered by technology.

Tobias Pross, CEO of Allianz Global Investors, said that AI is “causing a wave of disruption in all industry groups that could dramatically change the profitability structure of every industry,” and that companies need to identify and deploy. new business strategies to keep pace with change.

Sustainable investing is an area where technology will be crucial, with large amounts of data needed to inform investment decisions and to meet disclosure requirements under the European Union’s Sustainable Financial Disclosure Regulation.

Sandro Pierri, CEO of BNP Paribas Asset Management, said: “Technology is a key enabler of sustainability in multiple aspects of the industry. It can improve the customer journey, for example through robo-advisory, it can generate alpha through greater efficiency enabled by AI and big data, and can facilitate analysis in areas such as ESG disclosure. improved and non-financial disclosure.

Bruno Poulin, Founding Partner and Managing Director of Ossiam, added: “Investment managers have not fully exploited the continued rise in data availability for machine learning and natural language processing. They have a lot to offer for investment strategies and their integration of ESG measures. “

Asset managers have come under increased scrutiny in recent months over concerns over so-called greenwashing, where managers mislead investors about their ESG credentials.

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The EU’s SFDR aims to prevent this practice by requiring managers to sort their funds into categories based on their ESG approach, and requires additional information from fund managers for which they will need to collect data on their investments. .

However, the technology will be widely used, not just in sustainable investing.

Andre Keijsers, UK Managing Director of Kempen Capital Management, said the technology “will affect the entire asset management value chain, from investment to distribution to operations,” adding that managers who miss the boat on technology could face “substantial headwinds”.

Chris Cummings, chief executive of the trade body The Investment Association, added: “The pandemic has certainly accelerated the conversation about the transformative role technology will play in the long term.”

This is driven by “changing customer expectations, investor engagement and competitive models,” he said.

The shift has seen some asset managers invest in digital service companies, like Fidelity International’s partnership with fintech firm Moonfare in March, and Schroders’ investment in tech-driven wealth management firm. Benchmark Capital, announced the same month.

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Like other industries, asset management is moving towards hybrid work, which also poses technological challenges.

And as everyone gets used to doing more through video calls and other electronic platforms, Pierri said “customers expect more digital interaction.”

To contact the author of this story with comments or news, email Clare Dickinson

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