Better, Cheaper, Bionic – The impact of Digital on Portfolio Management

The Impact of Digital on Portfolio Management

The path of history has seen machines taking over an increasingly large share of what was previously performed by humans. The process has usually been gradual, rather than characterised by sudden change. We would argue, however, that what the world is now experiencing is more revolutionary than evolutionary.

The explosion in available information, combined with a corresponding rapid expansion of the capability to organise and analyse that information, is reshaping the commercial sphere. It is facilitating new business models, redefining the respective roles of humans and machines and recalibrating how best to combine the unique capabilities of each. For the asset management industry, much of the talk has centred on how technological developments will change client-facing activities – how you win and service clients and how you communicate with or advise them. There is relatively little discussion about how new applications of technology and sources of information will impact the investment engine itself – from how alpha is generated, to how portfolio solutions are customised, to how trades are executed. This is a dangerous omission. The digital technology revolution will influence every aspect of the asset management industry.

In this paper we argue that there are a handful of critical questions that all incumbent asset management firms must ask themselves in order to respond to the technological changes reshaping the Industry. It is through understanding the mechanism of digital disruption, and its impact on all aspects of the business, that asset managers can devise appropriate strategies to turn these digital threats into digital opportunities.

Better, Cheaper, Bionic - The impact of Digital on Portfolio Management