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The Modernization Journey: A Story of Firms Focused on Asset Growth

As investment managers realize that modernization is key to remain competitive, firms are exploring new investment management technology. In our webinar, expert panelists discuss the challenges and opportunities for fixed income investment managers to grow more effectively.

More and more investment firms acknowledge that modernizing their technology stacks is their strongest competitive advantage. In efforts to drive enhanced performance and streamlined processes, investment managers are embarking on a digital transformation journey to increase their own operational efficiency to overcome increased competition, fee pressure, and market volatility. New technologies, including automation, advanced analytics, and innovative portfolio management systems, are ensuring overall portfolio efficiency to realize profitable AUM growth.

In IMTC’s first webinar in a series of five focused on performance – The Modernization Journey: Digital Transformation Lessons for Investment Managers – our distinguished panelists discussed the ways investment managers drive stronger performance with digital transformation.

Watch the on demand webinar to see how investment managers can stay ahead of the curve.


Are investment managers resistant to change or just missing potential opportunities?

Investment management firms seeking out digital transformation tend to be in the minority. As an industry that is plagued by convention, many prefer Excel spreadsheets and existing systems to implementing a new tech stack. Even Accenture highlights that “40% of the asset managers…(representing about $15 trillion in assets) believe that technology is the future. But their current business strategy is hindered by legacy operations and technology environment.” A major focus for transformation will be in demonstrating the value new technology offers to internal stakeholders.

Communication is key to modernizing systems and workflows – success is really about people management. Whether considering tech for front-, middle- or back-office, end users will need to understand the purpose, the impact, and how it will either improve their life or their customers’ lives. While there’s a natural resistance to change, acceptance is more likely once team members understand the benefit and value it could add to their day-to-day job. Everyone is being asked to do more with less, so how can technology help improve someone’s capacity? And what does that capacity open the door for? Marc Piccuirro, Fixed Income Portfolio Manager at Wellington Management, expanded on the importance of automating workflows in allocating orders.

“We took the order building process, which can take up to two hours for the average person and we brought it down to about one minute by implementing a software program that would mimic the rules that we [used for making investment decisions] in addition to offering some additional insights.”

Asset managers often speak about their customization and intense care for each portfolio as a major competitive advantage but it also limits their ability to scale business. Because portfolio managers don't have the capacity and bandwidth to manage unlimited portfolios, firms require minimum account thresholds as it's too costly to manage portfolios at an AUM less than that threshold; this hinders a firm’s ability to grow AUM without additional resources to hire more PMs. The ability to increase individual bandwidth is a major reason firms pursue technology advancements.


Demonstrating the value of technology modernization

One of the main drivers in modernizing a firm’s tech is getting buy in from the top. As with any organizational investment, proving the return on investment is key to selling technology internally. While providing solutions to automate and create efficiencies, software champions need to tie value back to different areas of the firm.

When considering the front-office, the main value will be in how it provides a better customer experience and how you can make stronger investment decisions. Meanwhile, middle- and back-office teams may focus more on data quality and the ability to mitigate risks across the firm. Similarly, the value that resonates with executives, upper management, middle management, or more junior team members will be different. In the webinar, Piccuirro discusses how “more time to perform quality controls and error reduction resonates with middle management, [while] more time spent on alpha generation is great for the PM level and upper management.” A more junior team member who is often in the weeds may find value in the automation of mundane tasks that enables them to focus on higher-value-add functions.

Charlie Dwyer, Global Operations & Technology Consultant, talks about his experience in implementing technology and how upskilled staff enables firms to not only grow AUM, but also improve job satisfaction.

“You get scale. I’m taking the mundane processes that I used to do and I’m automating them. [As a result] I’ve upskilled my staff, I’m better utilizing them; so I’m able to take on additional clients.”


Completing the loop in the modernization journey

The journey to modernization is not complete once the value of technology has been sold. And as Dr. Elizabeth Xu, Group CTO of CP Group, details, often technology is about prevention and business continuity, rather than efficiency and value gained on a daily basis. “As a leader we have to look at the processes and not just say ‘how can we make these normal processes faster’, but also look at a disaster-recovery scenario: ‘how can we use technologies such as cloud to make our business bullet proof ?’.”

As firms embark on a digital transformation journey, there are many aspects to consider, including:

  • Designing a Technology Roadmap – is this technology investment the ideal and ultimate goal or is it one step in the process

  • Integration of Systems – how will data and workflows interconnect across the organization

  • Implementation of Technology Solutions – who will lead the process of ensuring technology is brought to fruition and meets initial goals

  • Training on New Platforms – how to enable end users to effectively use the digital tools the firm invested in

  • Retiring Legacy Systems – when new technology is implemented, how to remove old platforms to fully realize the cost savings

“We’re trying to be champions of innovation, but you can’t just drop this technology on the desk of a portfolio manager’s desk and say ‘hope that works’... We’ve created an entire division called Investment Science, filled with data scientists… [and we’re] integrating them into the investment management process. The firm has an army of professionals to help the PM’s extract the value.” - Marc Piccuirro

For modern firms, staying the course will no longer be an option. Those who adapt the principles of agility foster a culture of innovation and growth, proactively addressing change instead of reacting to market forces. While some firms may have developed a strategic vision and multi-year plans, others are embarking on this journey in bite-sized steps; regardless, all modern firms are taking action to move their firm forward along the digital transformation journey.



Technology is only as good as how it is used. NOVA is designed by and for fixed income professionals, empowering them to take action and make decisions quickly and accurately with real-time data and analytics capabilities. It allows you to future-proof your business; driving operational efficiencies, mitigating risk and delivering performance, to ultimately enable business growth. Learn more about NOVA.


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