By: Kendall Reischl
New SS&C survey sheds light on key trends, challenges, and opportunities affecting global insurance and asset management executives. Download the 2016 survey today.
Last week we shared the results of our 2016 Global Insurance Asset Management Technology Outlook. Check out some of the key findings below and be sure to download the full results to have all this valuable data at your fingertips.
- Large insurers and other asset management firms are expanding their portfolios
One of the key findings of the survey revealed that over 33% of asset managers plan on increasing investments in commercial loans, alternatives, derivatives, equities and mutual funds over the next 12-month period. Large insurers and other asset management firms are expanding their portfolios to include a wider range of asset classes in an effort to increase yields in a low interest rate environment.
- Expanding portfolios comes with some challenges
The two most challenging aspects of expansion were noted as the processing of new securities types and compliance with related regulations and accounting standards. Our survey found that asset managers are responding to this challenge with plans to increase the use of both external managers and operational services partners, with 53% of respondents reporting that deeper knowledge of specific asset classes most influence their decision to use external managers.
- Investment firms are migrating away from homegrown technology solutions
Continuing on a trend we observed in the 2015 survey, many investment firms are moving towards licensed software and outsourcing services from vendor partners. 25% percent of companies surveyed currently use an internally-developed system and our findings indicate that this will drop by 20% by 2021, with a directional shift toward both outsourcing and purchase of vendor-provided solutions. Outsourcing is the favored strategy of the two approaches, with a jump from 10% usage today to a projected 35% within three years.
- The most important consideration for choosing an operational model is availability of skilled staff
While many considerations come into play when insurers weigh the costs and benefits of choosing a software-centric vs. outsourcing model for their investment-related systems, the 2016 survey reveals that staff skill levels, regulatory compliance capabilities, and access to technology are at the top. Across firms both big and small, the most important consideration for choosing an operational model was availability of skilled staff to meet needs. Development and retention of employee talent remains a challenge for insurance investment operations, which can make adoption of partially or fully outsourced functions compelling.
- Growth in cloud adoption also continues to trend upward
56% of respondents anticipate an increase in the use of cloud and hosting providers. The importance placed on cloud strategies continues to rise, as more firms become comfortable with the technology and the benefits that it can provide. Overall, 62% of respondents said that cloud technology is critical or extremely critical to their strategy.
SS&C conducted this survey in Q2 2016 by polling 100 insurance and asset management executives in accounting, finance operations, investments, and technology from around the globe. Participants were asked to respond to 28 questions on current challenges, concerns, and the future direction of their asset management operations. The complete survey report is available for download here.