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Apr 18, 2019

Mifid II: Asset managers focusing on digitization projects

The far-reaching regulation means buy-side firms are prioritizing data-led projects

Mifid II has brought about a number of new developments and trends since its introduction, but a new one is that asset managers are increasingly looking to data analytics and digitization projects.

According to the Global Asset Management Survey by financial technology firm Linedata, buy-side firms are focusing on data-led projects to secure successes to protect investment and operational performance against the potential for market disruption as a result of regulation.

‘Asset managers were struck by a tumultuous end to last year that has led them to rapidly refocus on the critical initiatives that can boost operational efficiencies and alpha generation in 2019. In this environment, doing more with one of their greatest untapped assets – their data – is essential,’ says Gary Brackenridge, global head of research, development and North America asset management, at Linedata.

‘We expect to see more developments in this area as well as a rise in outsourcing, which can not only facilitate advanced data analysis, but enable managers to focus on delivering investment performance and exceptional client service to retain and attract assets,’ he adds.

The Linedata survey finds that maintaining investment performance is currently the biggest business challenge for the buy side, with 34 percent of respondents citing this issue ahead of other concerns including attracting new client assets (33 percent) and sustaining operational efficiency – 33 percent.

Interestingly, last year the top challenge was adapting to new regulation (44 percent) – so this has moved from a concern to an issue that’s being dealt with.

At the same time, doing more with data is viewed as important to investment performance with nearly a quarter of asset managers (23 percent) saying improvements to investment strategy decision-making is the biggest data analytics opportunity.

In addition, and possibly a little surprising given the focus on digitization, hype around robo-advisers and blockchain has died down: with 7 percent of respondents seeing robo-advisers as the biggest disruptor to the asset management industry over the next five years, down from 22 percent in 2018. At the same time, 12 percent see blockchain as the biggest disruptor, falling from 16 percent in 2018.