8 Technology Trends Investment Management Firms should take Notice of in 2021

As we embark on a new year, I like to scan the horizon and look at our own roadmap in order to make some predictions for the Investment Management sector, specifically around their IT strategies, but increasingly around their wider operations.

1)   Remote working: 2021 style

It goes without saying that all firms scaled their remote working systems during 2020, but I believe 2021 will be the year to focus on long term enablement of remote workers. Not just remote work but maximising productivity and improving the user experience, as more employees express a desire to retain their remote working status long term.

Commonly used collaboration tools are improving continuously and becoming more consumer in their approach. Microsoft Teams is evolving and adding functionality that wouldn’t be out of place in WhatsApp and users are expecting the same slick approach across their personal and business communications.

Moving beyond simply communicating with team members, more firms will be looking for ways to truly collaborate with team mates, external third parties, suppliers and investors. Providing access to relevant information freely, yet securely to all these parties will be critical to firms’ success in 2021. We are working with our clients to provide secure data rooms, shared portals and secure, appropriate ways to access centralised data and files in a very simple, streamlined way.

2)   Spend on cybersecurity solutions will increase

Following on from my point above, firms are expected to increase cybersecurity spend in order to secure remote workers. A Deloitte Insights research and industry outlook found that whilst spend is expected to remain flat or decrease in some areas of technology spend, the top areas for increased spend are cybersecurity in Europe and data privacy in North America. To me, this is a given, following the huge increase in cyber attacks in 2020 and the increasingly mobile nature of users. Our clients have always had a strong cybersecurity posture and we will continue to stress the importance of this.

3)   Specific areas of cybersecurity spend will increase

The decentralisation of cybersecurity will continue to be a focus and budgets should be directed towards endpoint security. Firms will be seeking to secure the user and their device as they move around the distributed environment, with identity and access management solutions and device and user monitoring. As AI and machine learning become de facto, firms should utilise them in monitoring and alerting on behaviours or access attempts that indicate anomalous behaviours. Having systems in place to automate security lockdown or isolating devices in the event of an alert are critical. Resolving issues as quickly as they are raised will ensure businesses can operate seamlessly and without interruption.

4)   People-centricity will be everything

What has been made abundantly clear and will continue to be a differentiator between highly successful firms and “all the rest” is that people are the most important part of the business. Despite working remotely and being physically separate, the teams, the individuals and the value they bring are critical for the success of any business. For firms to recognise this and actively put people at the core of the business is complex and multi-faceted and demands investment in time and budget.

Firstly, firms need the right technology and digital processes in place to enable them to effectively communicate and feel like part of a team. As part of a people-centric approach, firms will be investing more in interconnected systems to help them with previously manual processes like booking hot desks, liaising with clients, maintaining social distancing and demonstrating that the firm is making it easy for people to stay safe and maintain their productivity levels.

Providing teams with opportunities for personal and professional development and fulfilment is essential, and we have always invested hugely in staff training and development. Now more than ever firms need to start considering their employees’ wellbeing. By this, I’m talking about stress levels, mental health, emotional wellbeing and physical health. Whether this is investing in expert support with stress management programmes, wellness coaching, counselling, fitness memberships, healthcare plans, or additional annual leave that is to be used for personal wellbeing. By prioritising employees wellbeing, firms can keep their teams engaged, focused and productive. Longer term, they should see lower staff turnover and greater loyalty levels, which will ultimately contribute to profitability.

5)   Outsourcing and offshoring technology services will continue to be a growth area for the investment management sector

Deloitte predict that firms will invest less in building or buying technology solutions in 2021, instead choosing to outsource or offshore their technology requirements. The elevation of outsource partners’ importance through 2020 has demonstrated their true value, flexibility and reliability. For us, the outsourced model at C-level works really well. The COO is critical to the running of the business and some managers, particularly emerging managers, want to get a very experienced resource at a realistic price. Outsourcing provides that option. Few firms will require a full time CTO and the outsourced model is ideal here. Likewise the CISO, that rare individual whose skills are out of reach of many firms, is best suited to a part-time outsourced resource.

As always, when performing due diligence on any outsource partner, ask for industry references, proven technology and a solid financial record to ensure stability and sustainability.

6)   Spend on automation will decrease in some areas

Despite its well documented return on investment and ability to drive savings quickly, over half the Deloitte Insights survey respondents indicated that their firm planned to reduce their technology spend, some of which would be in the area of automation. This reduction will come mainly from the mid-market, who anticipate cuts to their RPA budgets, whilst very large and very small firms plan to continue spending on automation projects. This possibly reflects the relative value that can be derived from automation by firms of different sizes. Smaller firms see a great value from automating key processes, as it allows them to operate at a higher level of productivity and larger firms may simply have larger tech budgets that allow them to innovate and operate beyond the essentials.

7)  "Digital Transformation" will persist

Digital transformation will continue to be a buzzword and will be seen as essential for firms that are looking for ways to improve customer/investor relations, reduce overall costs, retain staff and thrive in tricky times. Digital transformation will involve outsourcing and cloud services, both of which allow firms to modernise their applications and the way they are delivered to users, anywhere they choose to work.

8)   Adaptable, composable data solutions

Gartner talks about adaptable, composable data solutions in its outlook for 2021 and it couldn’t be more relevant to the investment management sector. Changing regulations and increased reporting burdens will mean that investment firms need to rethink their data management strategies, so that they are flexible enough to respond to new requirements quickly. For example, the Investment Firm Prudential Regime will be placing huge demands on many firms to accurately calculate NAV, report profits and complete assessments. This will mean a change in the way data is gathered, carved up and served. Firms will need to adapt existing data management systems or integrate new data management solutions to meet the demands.

Vendors and IT partners will need to offer solutions that bring disparate data from external sources together into a centralised pool, providing a single source of truth. Data lakes, warehouses and data management systems will be the hotly demanded technologies of 2021.

As ever, I’m here to help advise and support the sector, so if you want to chat, send me a DM and I’ll be in touch.