What Are The Latest Trends in Asset Management Operations?

In 2024 Alpha completed its annual Global Operations Survey which included 57 Asset Managers and Asset Owners globally with a combined AuM of $30 trillion.

Alpha’s 2024 Global Operations survey highlights the increasing pressure on margins, which is driving a widespread industry commitment to cost optimization, efficiency, and automation. This article will explore the survey findings and their implications for the future of operations, including how firms are pursuing efficiency savings, leveraging AI, and driving change across their operating models.

The proportion of Asset Managers and Asset Owners engaging in cost optimization activities in Operations increases with firm size, ranging from 47% of smaller firms (under $50bn AuM) to 77% of large firms (over $200bn AuM).

Survey participants ranked the following areas as the priority areas for cost optimization within Operations:

Although managers remain focused on cost optimization, given the evolution of product diversification and growth in private assets, the survey identified the number one priority focus for firms was to drive efficiency and automation to enable improved scalability and cost savings.

In order to address these priorities, Asset Managers and Asset Owners are undertaking strategic initiatives across the operating model:

The industry trend towards provider consolidation and bundling of Middle and Back Office services continues, driven by economies of scale benefiting both service providers and clients – Alpha has seen average savings of 20% on cost when bundling Middle and Back Office. As firms grow, there is a clear trend towards outsourcing Middle Office services, with 44% of small firms opting to outsource, rising to 61% among large firms.

Middle Office operating model changes (32%) have been the primary driver of planned changes, often in conjunction with Back Office transformations. Back Office-only change was reported by a small minority of participants (7%).

While historically the cost and timeline of switching Middle Office providers has kept levels of provider transition low, the survey has identified there is a growing receptivity to Middle Office provider change with 20% of survey participants who already outsource their Middle Office are planning a change to their model, all of whom reported cost as the key driver. Additionally, 24% of participants who outsource their Middle Office were considering change alongside Back Office change citing evolution of the overall operating model as a key driver including the use of Enterprise Platforms.

Enterprise Platforms are no longer reserved only for large firms.

While best-in-breed and hybrid models remain viable for many firms, the adoption of Enterprise Platforms is growing as firms aim to simplify their architecture, improve operational efficiency (34%), and achieve long-term cost reduction (19%).

Among smaller managers, there is a notable increase in the adoption and consideration of Enterprise Platforms with 17% of small and medium survey participants contemplating this shift. The acceleration of Enterprise Platform implementations and enhanced collaboration with service providers have fueled this appetite for change, as evidenced by Alpha’s recently completed accelerated enterprise platform implementations.

With decreased barriers to entry for Cloud Data Platforms, thanks to consumption-based license fees and quick access to cloud-based solutions, firms are increasingly turning to providers like Snowflake to store operational data. Additionally, there is a growing recognition of the importance of having dedicated data teams within Operations functions, with 69% of survey participants indicating they have such teams.

To support increased Cloud Data Platform adoption, Alpha has expanded its technology capabilities through acquisitions, including specialist Data Platform development capabilities.

AI adoption in Operations has typically lagged behind the wider organization, where Front Office teams have been quicker to adopt AI for analysis and idea generation. However, AI adoption in Operations is growing, with most firms utilizing vendor products such as OpenAI or Copilot. Increasingly, firms are building capabilities or seeking vendors to support machine learning (38%) and generative AI (25%), recognizing opportunities to enhance efficiencies in reconciliations, data management, analytics, and manual processes such as Client Reporting.

Consistent with survey findings, Alpha expects the drive for efficiency and automation to continue across Operations functions in the coming years as firms seek to lower costs and enhance scalability.

Alpha will conduct its 2025 Global Operations Survey, with exclusive survey read-outs for participants which will be contacted in Summer 2025. Please contact Alpha’s regional survey leads listed below if you are interested in participating.

¹Note: Alpha’s 2024 Global Operations Survey included 57 Asset Manager and Asset Owner participants with combined AuM of $29T, representing firms of all geographies, complexity and size.