11 Feb 2020

Top Tech Predictions for the Alternative Investment Sector in 2020


Welcome to the new year! Looking back, 2019 was truly a year of innovation within financial services, especially with regards to how technology is being better utilized within the alternative and traditional investment industry to drive operational efficiencies. Reflecting on last year as a team naturally led us to ideate on the exciting buyside technology developments to expect in 2020. To that effect, we have put together our top five tech predictions for the investment sector. Have a read and let us know which you think are most likely to come to fruition as investment managers continue to embrace the digital age!

Managers will increasingly seek managed services for cloud management.

Cloud workloads are expected to increase by one-third this year. As hybrid and public cloud approaches increase in complexity, and in the depth and breadth of their service offerings, managers will turn to managed services to navigate and determine what the right management tools and security solutions are for their business needs. By optimizing lifecycle management in a hybrid cloud environment, it will become easier to optimize the platform best suited for each workload and to plan a migration and data management strategy accordingly.

SaaS adoption will continue to rise due to its simplicity, reliability and predictability.

Attraction to Software-as-a-Service (SaaS) is increasing, as managers come to understand how it is an accessible and convenient alternative to on-premise deployment. It eliminates the need for local systems, while facilitating business operations and providing technology professionals the time to focus on more strategic and value-added initiatives.

It also provides the ability to evolve with automatic updates, upgrades and to scale more easily. As managers grow in size and their demands change, they need a system that will seamlessly grow alongside them. With inexpensive upgrades and reduced security concerns, due to the vendor hosting the software being responsible for security functions, it’s no surprise that SaaS is quickly becoming the main software distribution model for many companies.

For example, almost all of our clients use Office365 because of the breadth of its products, capabilities, and deployment speeds. New seats can be easily deployed or removed in seconds.

Data analytics intelligence will improve workforce optimization and inform product and service transformation.

Informed decisions are key to keeping operations running smoothly and planning future successful product and service initiatives. Being able to analyze data is a key requirement of an analyst’s role; however, covering all the necessary data for all the companies in a highly diversified equity long/short portfolio is nearly impossible without some help from technology.

Automation, augmented analytics, and artificial intelligence are key to this problem, as they will unlock the value of data to allow businesses to better optimize their operations and investments. We will see organizations rebalancing their workforces to focus more on the collaboration between humans and technology, so that creativity can grow alongside digital skills and operational and investment innovation can prosper.

Managers will use AI to power automation solutions that will drive efficiencies, allowing them to do more with less human capital.

With fee pressure as an ever-present concern for COOs, operational efficiency is a key goal for all managers right now. As such, the industry is increasingly looking for SaaS solutions and a self-service model to help automate business functions that are repetitive and labor-intensive. The main advantages of SaaS are that it is easily implemented, scaled and managed while also having a low initial cost. As a result, staff effort can be focused on more strategic initiatives that will help clients evolve and remain competitive.

A famous example of a firm that uses AI and automation technology to great effect is Bridgewater Associates. They utilize these tools not only to understand the markets, but to operate automatically, using cause and effect like a machine.

As attacks increase in sophistication, the optimal cybersecurity strategy must combine highly sophisticated detection with a lightning speed response.

As cyber criminals incorporate detailed research and improved targeting when phishing and vishing, managers need more advanced detection capabilities. Tools driven by AI/ML are imperative to combating attacks using the same technology. For example, deep fakes, which are the latest evolution in these attacks, are much harder to detect. By utilizing more sophisticated tools, managers can detect a multitude of different risk indicators more efficiently and action a timely response. Making regular staff training and testing a priority is also key. When staff are on alert to recognize when they are being targeted, the likelihood of them falling prey to attacks decreases.

Another new cyber-attack trend is the targeting of SaaS tools and the public cloud. As managers shift from on-premise data storage to the public cloud and begin to use the SaaS tools increasingly being offered by their counterparties, it is important to remember that these third parties, regardless of how large they are, are not invulnerable to breaches. Understanding weak spots presented by your use of the public cloud and SaaS tools can help you better extend your cyber defenses to cover them.

Lastly, in 2020, ransomware will continue to combine the usual data lock-out with data exfiltration capabilities. The main goal of hackers has evolved from bypassing defenses and encrypting as much data as possible, to ransomware attacks that target incredibly high-value, non-public and proprietary information. Managers must quickly respond to these attacks to mitigate damage and stem the outflow of confidential data.

For more information on these trends or to discuss how you can future-proof your business into 2020 and beyond, please contact RFA today.

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