Asset management firms are putting technology upgrades in artificial intelligence and automation aside to beef up tech related to remote working, according to a recent survey by consulting firm Deloitte.
The survey, conducted in August as part of the firm’s annual investment management outlook, found that asset managers in North America, Europe, and Asia planned to increase spending in areas like data privacy and cybersecurity, which are seen as critical for allowing employees to work from different locations.
“Not surprisingly, this indicates that investment management firms are spending in part to support remote and distributed working arrangements brought about by the pandemic,” Deloitte said in the report, expected to be released Thursday.
On a net basis, 54 percent of North American firms planned to spend more on data privacy in the coming year, versus 23 percent of European respondents and 36 percent of Asia-Pacific firms. For the latter regions, cybersecurity was seen as the biggest priority, cited by a net 42 percent of European firms and 53 percent of Asia-Pacific respondents. A net 46 percent of North American firms also reported a higher budget for cybersecurity over the next 12 months.
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At least for some firms, these privacy and security upgrades appear to be coming at the expense of investments in other technology, such as artificial intelligence, blockchain, and automation. North American and European asset managers reported that they planned to spend less on both AI and robotic process automatic (RPA) in the coming year, with North American firms additionally planning spending cuts on blockchain technologies. Firms based in Asia favored increased spending on both blockchain and automation, but appeared set to maintain current budgets for AI.
“The surprise in these survey results is the reduction in spending on RPA for firms with US$1-25 billion in revenue,” Deloitte said. “These projects often lead to direct cost savings.”
The consulting firm suggested that the pause in automation could be related to pledges by investment managers to forgo layoffs during the pandemic. According to the report, layoffs in investment management roles have been minimal across all the regions including the survey, with U.S. Bureau of Labor statistics showing that employment in the industry has increased this year.
“Perhaps firms are delaying these RPA projects to a time that is more favorable to reassigning employees, rather than laying them off,” Deloitte said.
The remote working environment has also caused asset managers to rethink how they communicate and engage with clients, according to the survey. Many respondents indicated that they would lean more on virtual meanings or adopt online tools like chatbots or social media to interact with retail clients. Just one percent said the pandemic would have no effect on their firms’ client communication strategy.
“Investment management firms changed priorities based on the experiences and necessities brought about by the Covid-19 pandemic,” Deloitte said. “The industry is trading some long-term differentiation for a swift transformation to digitally enabled processes that support operations and customer interactions.”