The great asset management process transformation

To the point

The Spanish asset management industry’s robust growth is expected to continue in the coming years.

However, the market’s rapid pace of change is forcing managers to examine whether their processes are scalable, modular, efficient in dedication capacity, and adaptable to regulatory changes.

Four process change levers will drive the industry in the coming years

• Attaining operational efficiency and automatization;
• Strengthening control, client reporting and compliance processes;
• Being agile in the face of regulatory changes; and
• Obtaining a prioritization path for the operating model’s initiatives.

Introduction

The Spanish asset management industry continues to show robust growth year on year since the pandemic. Amid 2024’s falling interest rates, savings capture soared both in the number of investors (with a 2.7% increase) and the total volume captured (with net subscriptions exceeding 26,487 million). As a result, assets under management (AuMs) in Spain grew by 14.7% in 2024, and the outlook for 2025 remains promising.

However, the pace of the industry’s ever-evolving landscape is set to escalate in the coming years. To ensure this growth continues, asset management companies are assessing whether their organization’s processes are:

• Scalable;
• Modular in response to market needs;
• Efficient regarding capacity, both in people and technology; and
• Can adapt with agility to regulatory changes.

Four main levers are driving this process transformation, which are either already underway or on the horizon for 2025.

The first lever is the asset management industry’s clear commitment to operational efficiency and automizing front-to-back processes, with robust and modular market management tools depending on each company’s product portfolio. Automating low-value-added processes allows managers to dedicate more time to portfolio analysis and decision-making.

Tasks that are ripe for this lever include:

• Automating manual activities needed to carry out pre-trade controls;
• Developing complex models in spreadsheets, which the incorporation of artificial intelligence (AI) can significantly improve; and
• The “tedious” search of figures to select investment alternatives in various information sources.

Asset management companies are substantially investing in this area and strengthening their operating models to support growth over the next few years.

The second lever is improving control, client reporting and compliance processes. Regulators’ are increasing the regulatory pressure in the “control and supervision framework”, and the fund houses required a higher degree of sophistication to evolve the systems/platforms of these processes

The improvements high on the agenda of firms’ operational and control teams include:

• Automatic control verification;
• Data cleansing processes;
• Control activity consistency; and
• Regulatory and client reporting agility.

The third lever is agility in the face of regulatory changes, so that asset managers can quickly adapt to a specific regulation. As the regulatory landscape continues to evolve, asset managers need a future-proof model that allows for nimble changes. Measures that significantly facilitate regulatory transformation include:

• Possessing a technological architecture based on application programming interfaces (APIs);
• Being as independent as possible in decision-making regarding parent groups; and
• Mapping out impacted processes.

Alongside the Digital Operational Resilience Act (DORA) and the Sustainable Finance Disclosure Regulation (SFDR), several regulations are set to shake up the industry in the next few years.

In addition in 2025, if finally will be going forward, we have in the regulatory pipeline the Retail Investment Strategy (RIS) Directive’s, which value for money requirements will significantly impact firms’ critical processes. Asset management companies will be challenged on several fronts, from pricing, methodology and calculation engines to transmitting files to distributors and regulators, including national competent authorities and the European Securities and Markets Authority (ESMA).

Last but definitely not least, the final lever is creating a prioritization path for the operating model’s initiatives. A common process taxonomy and a concrete initiatives map will help transformation teams get to work and avoid analysis paralysis.

This process map must be end-to-end, place the investors and customers at the center, and include tools allowing the real-time evaluation of the market and competitors.

Conclusion

While the industry is currently in a sweet spot, with high growth expectations, the pace of its changing ecosystem has significantly accelerated. As a result, processes and operations must be scalable, efficient and agile, and operative models are due for a rethink. The scalability of asset management firms’ processes will enable sustained, predictable and reliable industry growth.