Finance

Fund management chiefs say tech will drive change as pressure builds on ESG

Technology will be a key driver of change in the asset management industry over the coming years, according to senior executives, particularly as pressure ramps up on how sustainable investments are reported.

Financial News sent a series of questions to executives at the firms that were shortlisted for our Asset Management Awards 2021 to get their thoughts on the trends shaping the sector. New technologies such as artificial intelligence, machine learning, and language processing were some of the biggest disruptors that CEOs identified.

“Technology is the latest battleground in our industry today and will be a key differentiating and disruptive force for our industry,” said Valérie Baudson, Amundi’s chief executive.

She added that asset managers need to invest in innovation and human capital to take advantage of the opportunities that technology brings.

Tobias Pross, CEO of Allianz Global Investors, said that AI is “causing a wave of disruption across every industry group that could dramatically alter the structure of each industry’s profitability”, and that companies need to identify and deploy new business strategies in order to keep up with the pace of change.

One area where technology will be crucial is sustainable investing, with large amounts of data required to inform investment decisions and in order to meet disclosure requirements under the European Union’s Sustainable Financial Disclosure Regulation.

Sandro Pierri, CEO of BNP Paribas Asset Management, said: “Technology is a key enabler around sustainability across multiple aspects of the industry. It can enhance the client journey, for example through robo-advisory, it can drive alpha through greater efficiencies enabled by AI and big data, and can facilitate analysis of areas such as enhanced ESG disclosure and non-financial disclosure.”

Bruno Poulin, founding partner and chief executive of Ossiam added: “Investment managers have not fully tapped the continuing boom in availability of data for machine-learning and natural language processing. They have much to offer for investment strategies and their integration of ESG metrics.”

There has been increased scrutiny of asset managers in recent months amid concerns over so-called greenwashing, where managers mislead investors over their ESG credentials.

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The EU’s SFDR aims to prevent the practice by asking managers to sort their funds into categories based on their ESG approach, and requires additional disclosures from fund managers for which they will need to collect data about their investments.

Technology will have widespread use, however, not just in sustainable investing.

Andre Keijsers, UK managing director at Kempen Capital Management, said that technology “will affect the complete asset management value chain, from investment via distribution to operations”, adding that managers which miss the boat on technology could face “substantial headwinds”.

Chris Cummings, chief executive of trade body The Investment Association, added: “The pandemic has certainly accelerated the conversation about the transformative role that technology will play over the longer-term”.

This is being driven by “changing customer expectations, investor engagement and patterns of competition,” he said.

This shift has seen some asset managers making investments in digital service companies, such as Fidelity International’s partnership with financial technology firm Moonfare in March, and Schroders’ investment in tech-driven wealth management firm Benchmark Capital, announced the same month.

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Like other industries, asset management is moving towards hybrid working, which also brings technological challenges.

And with everyone getting used to doing more via video calls and other electronic platforms, Pierri said that “clients expect more digital interaction”.

To contact the author of this story with feedback or news, email Clare Dickinson

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