The Association Française de la Gestion (AFG) released a white paper[1] on 2nd February 2023 after hosting an event on the same day that Manon Anglade and Elizabeth Zigrovic of Leo RegTech Ltd also attended.
Here are two important takeaways that we will focus on:
1. How technology improves operational functions for asset management companies; and
2. How humans can adapt to technology
1. How Technology improves operational functions
The transformation of operational functions is now one of the core focus points for asset management companies (AMCs). According to an Accenture study[2], more than two-thirds of asset managers believe that changing their operating model is one of the main levers they can use to gain efficiency.
More concretely, in 2021 only 5% of asset managers do not plan to transition to the ‘cloud’, compared to 53% in 2019. This shows a change in mentality for AMCs that are looking for greater centralization of data, improved efficiency, scalability, and better accessibility.
This change is necessary not only to meet the changing needs of customers, but also to respond to tightening regulations, cope with pressure on margins, improve the efficiency of processes and information systems, and control risk management.
AMCs will have to implement efficient data governance with the objective of automating middle and back-office functions while facilitating data access. Data management and control are fundamental issues for making better investment decisions, optimizing operational functions, meeting regulatory requirements, and above all, meeting investor and/or customer expectations.
The AFG notes that there is a split between large AMCs capable of automating their operations internally and smaller AMCs relying on outsourcing to RegTechs and FinTechs. However, the outsourcing trend continues to grow among AMCs (large or small) seeking to streamline operations and increase efficiency within reasonable budgets.
The AFG further notes that AMCs need to promote a culture of innovation by reinforcing their teams through the inclusion of tech profiles, supporting employees to overcome resistance to change, and integrating new technologies necessary for their digital transformation.
At Leo, we have helped hundreds of clients with the digitization of their compliance process. Because we believe each AMC is different, the content of our software is designed to be adaptable, to suit the particularities of all AMCs, making technological implementation effortless for compliance officers and their team.
2. How humans can adapt to technology
The change will be human lead, it must be. According to a study carried out by BPI France,[3] “robots will not replace humans, but 1 in 2 employees will work with AI or a robot”. While this study focuses on the entire economy and is not limited to AMCs, it nevertheless allows us to highlight tomorrow’s trends. Professions are inevitably evolving and increasingly require computer logic and digital tools while maintaining cognitive skills that machines or AI cannot provide, such as critical thinking, creativity, communication, and collaboration.
Another important factor pointed out by a KPMG study[4] is that 42% of AMCs consider top management to play a strategic role in digital transformation projects. To do this, the company’s culture must gradually evolve towards more collaboration. It is a question of raising awareness at all levels, and this can only be achieved through continuous training to integrate technology into day-to-day roles and encourage technological initiatives for constant innovation.
This is why Leo integrates training into its system within the set-up phase, not only for the compliance team but for all employees. This ensures that technology is being actively used, and the culture of data management is embedded within each of our clients. We also ensure a continuous dialogue with our clients to match their needs and increase their usage of Leo as well as their operational efficiency.
Our clients benefit from a resilient system that allows transparency and access to compliance data in one place, preventing any data disruption usually caused by employee departure or holiday. With Leo, you can know in real-time what is being done on the 1st/2nd/3rd levels of compliance with just a few clicks depending on your user group access.
[1] https://livre-blanc.afg.asso.fr
[2] “Reinventing Operations in Asset Management” Accenture, 2019
[3] BPI France 2022 study, “Les enjeux de demain”.
[4] KPMG 2019 study “Getting digital right: how asset managers can deliver more value from digital”.
