Costs, compliance and revenue: The core drivers of buy-side tech adoption

Making the case for tech investment

The global asset management industry grew every year between 2008 and the outbreak of the Covid-19 pandemic – bar a 3% drop in 2018, from which it bounced back strongly, with AUM growth of 15% the following year.

But revenues as a percentage of AUM fell steadily in that same period, due to the continued decline of active core products and the shift to passive funds. Costs remained a stable proportion of AUM, with established asset managers hampered by legacy technology and process inefficiencies. Consequently, asset managers' profit margins have been gradually narrowing. Futureproofing and resiliency in asset management post-pandemic Covid-19 compounded these twin pressures of declining fees and persistent costs. Volatility in stockmarkets caused some funds to report huge outflows of capita...