Industry forces reshaping the asset management industry have been gathering for the past ten years and are now reaching critical mass. Investment management firms need to act today to align operating models to their future business models. For technology and operations leaders, the future is already here.
Recently, Gavin Little-Gill, Enfusion’s Head of Go-to-Market Product Management, and Lotte Tønsberg, Managing Director and Enfusion’s EMEA Head of Sales, discussed industry trends, transformation priorities, and the technology needed to move firms forward.
What’s the current state of the asset management industry, and how did we get here?
Gavin Little-Gill: Asset management transformation is accelerating driven by market evolution, technology advances, fee pressures, competition, and investor expectations.
The consistent outperformance of passive strategies over active management over the past decade has played a significant role in product evolution and fee compression. While investors will pay higher fees for innovative active strategies, they demand justification through performance or non-correlated returns.
More innovative asset managers have responded by embracing more complex securities and portfolio strategies, such that the future of “traditional” asset management is beginning to mirror the way hedge funds operate.
However, many firms are finding they need new technology to support new strategies and operating models. The rigidity and costs of “fit for purpose” legacy systems are creating operational risks and limiting agility.
Given these shifts toward more complex strategies, how are firms adapting their approach to technology?
Lotte Tønsberg: Some of the most complex investment firms are pivoting toward modular, SaaS solutions to centralize data more fully and streamline operations, which helps them overcome the long-standing challenges Gavin describes.
Modern technology Software-as-a-service (SaaS) platforms like Enfusion enable this data-centric approach, integrating insights and reducing costs so firms can respond faster and compete more effectively in a rapidly evolving landscape.
When we talk to clients, they want to know that our platform will evolve alongside their ambitions by remaining flexible, modular, and deeply integrated. In some cases, they've painted themselves into a corner with in-house technology that becomes too complex to update and maintain or legacy software that limits their ability to adapt to meet changing needs. So, they don't want to repeat the same mistakes. They know they may have to pivot quickly to accommodate client-specific mandates, new asset classes, or new strategies. Enfusion’s solutions allow firms to remain nimble and react promptly to investor expectations—all while lowering technology and operational costs.
The good news is that a data-centric, SaaS approach to architecture allows them to integrate with other in-house systems as well. Firms can maintain data integrity while gradually migrating away from legacy infrastructure, one module at a time.
Does open architecture imply more connectivity with other service providers, too?
Gavin Little-Gill: Open architecture goes beyond internal connectivity among your in-house systems. It also implies greater connectivity with an entire ecosystem of data and service providers, so the platform can be leveraged to integrate with proprietary or best-in-class software, data, and industry utilities. It becomes the glue that connects firms with their broader ecosystem. An open architecture is critical to support a flexible operating model and the ability to adapt to support outsourced or hybrid service functions.
What role do factors like straight-through processing (STP) and automation play in improving efficiency?
Lotte Tønsberg: With a data-centric platform, you can drive risk and cost out of your operations. Every manual intervention adds costs and risks. A single source of position and transaction data facilitates straight-through processing (STP) and automation to minimize reconciliation remediation. You incur less cost and less risk, and your firm can focus on the investment process and supporting clients while scaling for future growth.
What are the three most essential steps for firms to take now on the path to the future?
Gavin Little-Gill: The path to the future for asset managers requires three essential steps.
- Reevaluate your entire business model: Start with a blank slate and critically examine your processes, technology, and data. With passive strategies outperforming active and growing demands for personalization, firms need to define where they provide unique value—whether through specialized products, distribution channels, or geographic expansion.
- Invest in flexible, data-centric technology: Staying competitive requires first-mover advantage and adaptability. The most complex 20% of a firm’s business creates 80% of the technology and operations headaches. Consider how you can effectively support both the majority and the most complex pieces of your business.
- Build a culture that supports ongoing transformation: Empower teams to embrace innovation, develop skills needed for future demands, and strategically decide which functions to retain in-house versus outsourcing. This approach creates a resilient, adaptable organization ready to capture and capitalize on emerging opportunities,
What steps have Enfusion clients taken toward innovation?
Lotte Tønsberg: We're seeing asset managers take steps beyond traditional, siloed operations in three key ways:
- Many are embracing new asset classes to diversify and boost returns, such as adding credit portfolios to their equity strategies. But doing so requires investment management platforms that can handle greater complexity without adding operational burdens.
- Data-centricity is helping some firms rethink and outsource non-core activities in the middle- and back-office. It allows them to prioritize alpha-generating activities. The key to outsourcing relies on open architecture and strong data governance for seamless execution of post-trade workflow while using automation to reduce manual tasks.
- Lastly, many are adopting modular platforms that offer flexibility for future growth. These platforms meet today’s needs with lower Total Cost of Ownership while supporting future expansion into new strategies or services. Flexible technology gives them room to remain nimble and evolve their entire business and operations in response to market changes and new opportunities.
Take the next step and contact us to explore how your firm can navigate the future.
Share
Related Topics