The Buy Side Supply Chain: An Evolution
The Path of Unbundling the Asset Management Supply Chain
Celent has released a new report titled The Buy Side Supply Chain: An Evolution. The report was written by Jay Wolstenholme, senior analyst in Celent’s Securities and Investments practice.
High margins and superior returns have allowed the asset manager’s front-to-back applications and operations to remain static for years. But now, in the low return economic environment, front-to-back efficiency is critical to survival. Asset management firms are placing operational and technical improvements as a top priority in order to stay competitive and minimize operational risk.
This report examines the asset manager’s front-to-back investment workflows, the necessary systems and components needed for optimal investment and operations, and the supply chain of vendors, custodians, and fund administrators providing these services.
Continuing lower returns, added operational costs due to growing regulation, and overall low operation margin have all weighed heavily on the industry. “But history tells us that down business cycles can also be a time of opportunity,” comments Wolstenholme. “Other industries, such as airlines and automakers, were forced to become leaner and operationally cost-efficient. So now is the time for asset managers to take advantage of the growing supply chain.”
The good news is that the market is flush with vendors, including both seasoned platform vendors and a multitude of startup Fintech choices. The hungry startups are not only providing edge-of-the-envelope ideas and products but are also causing established suppliers to refresh and improve their offerings and technology to keep their edge.