By Pulak Sinha, CEO, Pepper and Romi Mahajan, President Pepper
Though we are in the field, we continue to be amazed by the sheer size of the Asset Management industry. Worldwide, Asset Managers have in excess of $120 trillion AUM. Even fractional areas within Asset Management are measured in the trillions. It’s hard to overemphasize the importance of this space and it’s hard not to heed the call for real innovation to propel it onto new vistas. When we combine the volume of assets with the technologies that can liberate them from the shackles of stagnation, we get the convenient portmanteau “AssetTech.” We believe AssetTech will be defined by data in 2023.
Of course, there are multiple trends in AssetTech. The advent of Cloud-based platforms, the upgrades in security, the refinement of analytics tools, and the enhancement in communications systems are all trends that will continue. Each, in its own right, is a story that can be told. But when they are combined into one platform, one “source of the truth,” they become – potentially- an Asset Manager’s best friend and most important business-enhancer.
We say “potentially” for a reason. No technology is a silver bullet or a spell whose mere incantation changes the world. Instead, technology has to be combined with process and culture, each of which has to be inflected with a data-first mindset. With its sheer size and geographical ubiquity, Asset Management is not a monolith; it is actually a space with enormous complexity and a semi-infinite degrees of freedom for decision-making. Such a bountiful set of gifts is a reason for which to be thankful but with increasing choices, comes increasingly complexity and higher risk. Of these risks, indecision is in the top few.
All of these factors converge on the issue of data. How does an Asset Management company manage the myriad variables that impinge on its investment decisions? How does an Asset Management company ensure that a single data-note harmonizes the front, middle, and back offices? How does a multi-billion dollar (or even bigger) company create the “Agile Context” for its decision-making so that fast-moving markets provide actionable opportunities? And at the same time, how does it do all of these things while managing risk and hewing to its governance rules?
We know that interdependence is a truism in business. But what is the “signaling” agent between different parts of the organization to ensure that that interdependence is used in its favor? The answer is data ,yet again.
In 2023, data management, data use, and data-drenched decision making will be the key differentiator for Asset Management companies. The world of AssetTech must understand this well in order to serve the sector as much as it deserves.