Has the pandemic created a competitive disadvantage for asset managers dependent on legacy research management systems?
Over the past year, asset managers have had to rethink business processes and redefine the workplace environment to support remote working amid the COVID-19 pandemic. The events of the past 18 months have proven to be the ultimate stress test for systems and processes across the buy-side front office, and research management is no exception. And while the full extent of the pandemic’s impact on the asset management operating model is still not known, the picture of how 2020 has impacted front-office investment teams is getting clearer.
Our 2021 Investor Survey: Research Management Trends in the Year of a Pandemic found that, by a large margin, it was the front office that felt the impact of the shift to a work-from-home model most prominently. Nearly half (49%) of survey respondents reported their front-office teams had the most difficulty transitioning to working remotely, a much higher percentage than middle-office teams (29%) and back-office teams (22%).
For teams without systems in place to support work-from-anywhere capabilities, there were countless technological, operational, and workflow hurdles to overcome to ensure investment teams remained productive while working remotely.
Teams enabled with cloud-based, mobile-first Research Management Systems (RMS) were no doubt much better prepared to make the transition and are much better equipped now as we emerge from the pandemic and move toward a hybrid, home-office work cadence.
The data supports this. RMS client engagement metrics in the initial weeks of the pandemic were consistent with pre-pandemic usage, implying investment teams on our platform were operating in a business-as-usual mode during an incredibly disruptive time.
We also saw a material spike (50%) in usage of our mobile app suite as well as an increase in notes being authored directly in the RMS versus being sent into the platform from another application. We saw that as a clear signal that investment teams gravitated to the RMS to stay connected, collaborative, and productive regardless of where they were physically located.
As we emerge from the grips of the COVID-19 crisis, it’s not that surprising to learn that the top three technology requirements for front-office investment teams in 2021 are systems that improve workflow transparency, strengthen data security, and enable work-from-anywhere capabilities. Those are precisely the platform attributes our clients have relied on us to deliver for years, and that was especially evident over the past year.
This year’s survey also confirmed that the majority of asset management firms continue to move forward with front-office modernization initiatives. However, the pandemic may have caused some organizations relying on internally built legacy systems to fall behind.
According to the survey results, firms with no dedicated RMS in place continue to almost unanimously (95%) reported that they intend to implement a modern vendor platform in the next two years. That is consistent with 2020 results, when 96 percent of firms with no RMS said the same.
When looking at firms that report using a homegrown RMS, however, the picture is a little different. Only 57 percent said they intend to upgrade to a vendor platform in the next 24 months. While still a majority, that’s a considerable drop from when we posed the same question last year just weeks before global work-from-home orders were issued. At that time, 100 percent of firms using an internally built RMS reported they intended to upgrade to a vendor solution by the end of 2022.
If you take a step back and consider the extensive investments the asset management industry has made over the past decade to modernize every aspect of their business, one key observation stands out. The asset management operating model is in the midst of transformational change, driven largely by smarter technologies, better data, and more modern business processes. Front-office teams that tapped the breaks on system upgrades in 2020 will no doubt be left at a competitive disadvantage to organizations that either already had newer systems in place or invested to put them in place during the pandemic.
That disadvantage can come at the price of investment teams spending too much time searching for research they’ve already produced, or there being minimal systematic integration of research content with other investment processes and systems. Or it may mean that analysts aren’t able to capture and share new information and insights with their team in real time, so opportunities are missed. What’s apparent is the performance gap between firms with true work-from-anywhere solutions and those without them will continue to grow, and 2020 appears to have exacerbated that divide.
As 2021 has unfolded, however, we’ve seen a clear uptick in asset managers resuming modernization initiatives and seeking to upgrade front-office systems. That’s been especially true as we’ve entered the second quarter and firms have begun to map out their technology requirements as they move teams to a home-office, hybrid work cadence.
And consistent with our survey results, these organizations are looking to implement technologies and business processes that improve workflow transparency and enable work-from-anywhere capabilities without compromising team collaboration, their unique investment process, or information security. Ultimately, these upgrades will power a more efficient, reliable, and productive operating model for their front-office investment teams.
We encourage you to download the 2021 Investor Survey: Research Management Trends in the Year of a Pandemic report now to read more about how the pandemic has impacted technology and workflow requirements for the buy-side front office.