Across the globe, growth remains somewhat sluggish. After two years of relatively robust expansion, the global economic upswing has now slowed to a more subdued level, knocked back by financial market volatility and widespread political uncertainty. Trade and technology tensions between the US and China have seen tit-for-tat tariff increases on the nations’ respective imports, escalating an ongoing dispute between the world’s two largest economies. Over in Europe, meanwhile, prolonged Brexit-related uncertainty continues to weigh heavily on the eurozone’s economy. The pound hit a two-year low in July, and the UK economy has contracted for the first time since 2012 as the possibility of a no-deal Brexit looms large ahead of the planned October 31 exit date.
Elsewhere, growth in emerging markets and developing economies has also disappointed, with weaker-than-expected results across Asia and Latin America. While global growth is projected to pick up once again in 2020, this is decidedly precarious, hinging on favourable geopolitical outcomes and the successful resolution of current trade disputes.
Against this unpredictable economic backdrop, the investment management industry faces myriad challenges. In order to remain prosperous and ensure profitability for their clients, investment managers must successfully navigate this ongoing economic uncertainty, using their extensive knowledge and expertise to overcome ever-changing market conditions and capitalise on emerging opportunities. The winners of this year’s World Finance Investment Management Awards have shown themselves to be resilient, adaptable and innovative in such challenging conditions, establishing themselves as industry leaders that can be counted on to provide stability and security when it is needed most.
Playing by the rules
Last year, the investment management industry was largely concerned with exhaustive changes to establish regulatory frameworks. This year, the issue remains just as pertinent, as increased regulatory scrutiny continues to carve out a new landscape for the sector. From risk management to cybersecurity, there is increased pressure for investment managers to meet regulator demands in all aspects of their business, and to effectively and expeditiously apply any required regulatory changes to their operations. Time is certainly of the essence, and those who fail to make the necessary changes can expect significant damage to both their wallets and their reputations.
The fine for failing to comply with the EU’s sweeping General Data Protection Regulation (GDPR), for example, is four percent of the previous year’s annual global turnover, or €20m ($22.1m) – whichever is higher. Investment managers must also take care to comply with the EU’s MiFID II legislation, which, when introduced in early 2018, was hailed as a key milestone in creating the new, more transparent financial landscape that legislators have been promising since the global financial crisis a decade ago.
From risk management to cybersecurity, there is increased pressure for investment managers to meet regulator demands in all aspects of their business
The introduction of these frameworks last year reflects an ongoing trend within the financial sector towards greater regulatory oversight. According to a PwC report entitled Asset Management 2020 – A Brave New World, this flurry of regulatory activity is only set to increase over the upcoming months. As soon as 2020, PwC predicts “full transparency over investment activity in products will exist at all levels; there will be nowhere for non-compliant managers to hide as regulatory, tax and other information’s reciprocal rights will extend across the globe”.
However, just as regulatory compliance moves up the global financial agenda, meeting these requirements is also becoming increasingly complex as the investment industry digitalises. With data analysis set to play an indispensable role in the future of investment analysis, companies must stay conscious of both privacy laws and cybersecurity as they further digitalise their operations.
A new dawn
Even as the changing regulatory climate creates new costs for investment managers around the world, technological advances are helping to cut expenses quite dramatically. Traditionally, investment management has been a low-tech industry, but the sector is now in the midst of a comprehensive technological transformation. Robotic process automation has begun to redefine daily operations at investment management companies, taking over repetitive routine tasks such as data transcription – jobs that would otherwise take up a significant portion of an employee’s working day. This not only frees up workers to dedicate their time to more valuable tasks, but also allows companies to create a reliable, 24/7 workforce that can carry out essential data-driven tasks at any time of the day or night.
Machine learning and artificial intelligence (AI) are also set to transform the investment management industry, giving managers access to an extraordinary range of practical data, which will help them to better understand both their existing customers and potential clients. AI advisors and social media chatbots are particular areas of interest, as these can provide managers with a wealth of data on what customers are repeatedly searching for, allowing them to respond with suitable products and services. At the same time, customers themselves have grown to expect a streamlined digital experience when it comes to keeping track of their investments.
In order to meet this demand, investment managers must provide a range of innovative digital solutions that suitably satisfy their customers’ evolving needs – whether that be through round-the-clock personalised financial advice delivered by state-of-the-art chatbots or remote, on-demand access to their investment portfolios. As the financial services sector becomes increasingly digitalised, investment management firms cannot afford to fall behind the curve. If they wish to stay profitable and relevant in the years to come, now is the time to place technological innovation and investment at the very core of their businesses.
Appetite for change
Each year brings with it new opportunities and areas of interest, and 2019 could well be the year that environmental, social and governance (ESG) investments hit the mainstream. As climate change and environmental concerns continue to rise up the international sociopolitical agenda, investment managers would do well to consider their clients’ ESG preferences when moving forward. There is certainly a growing appetite for sustainable investments, with Moody’s predicting that green bond issuances will break $200bn in 2019 alone. This trend shows no signs of slowing down in 2020 and beyond, as the public consciousness shifts towards creating a greener, more sustainable future.
As we look to the months and years ahead, we can expect to see investment managers around the globe working to fully integrate ESG factors into their operations, using pertinent data analysis to assist clients in creating investment portfolios that truly reflect their own personal values. What’s more, as the ESG sector continues to grow, sustainable investments are set to create some substantial returns, making them increasingly attractive from both a financial and ethical standpoint.
In the rapidly evolving industry of investment management, only the most adaptable and forward-thinking firms can expect to enjoy continued success. The winners of this year’s World Finance Investment Management Awards have proved themselves in the most testing and turbulent times, finding opportunity where others have found adversity, and overcoming complex industry hurdles with ease. For an insight into the very brightest names in the world of investment management, take a look at our winners for 2019.
World Finance Investment Management Awards 2019
Antigua and Barbuda
Global Bank of Commerce
Chile – Equities and Fixed Income
BCI Asset Management
SURA Investment Management
Stefnir Asset Management
Setanta Asset Management
Mexico – Fixed Income
SURA Asset Management
APG Asset Management
AXA Investment Management
UOB Asset Management
Ak Asset Management
Wealth Management & Corporate Finance
Best Multi-Client Family Office, Liechtenstein
Best Real Estate Investment Company
Telecoms Deal of the Year, CEE