Investment firms are slow to embrace new technology and could fail to ‘remain competitive in the new era of finance’ according to State Street.
New research from the custodian bank showed very few buy-siders were adopting latest technologies for middle and back office, cyber security and data analytics.
Simultaneously investment firms, characterised as ‘digital laggards,’ are falling behind on the latest technology developments.
A survey of 2,000 investors and 500 investment providers revealed that just 22% of investment firms are applying vigorous cyber security measures.
In addition, 63% of ‘digital leaders’ are aligning front, back and mid-office functions to aid client service compared to 30% of investment firms while only 24% of them are boosting decision making processes by fully harnessing data and analytics.
The research states that ‘leaders’, defined as those using digital technologies to transform their businesses, are progressing in their usage of data in areas such as decision making, agility and safeguarding.
The research also outlined a number of steps needed for investment firms to accelerate their digital approach including redefining technology talent by looking outside of the industry and challenging the current operating model.
Investment firms are also advised to ‘future-proof’ their digital architecture to withstand regulatory requirements as well as develop policies focusing on customer data protection.
“New digital technologies will enable firms to provide a more fluid, dynamic and interactive investment experience for clients,” said Antoine Shagoury, chief information officer at State Street.
“Firms that neglect to understand and embrace emerging technologies from blockchain to artificial intelligence will also fail to remain competitive in this new era of finance, while those who live and breathe the digital revolution will be those who define the future of the sector.”