The global asset management industry faces significant challenges, including declining margins, rising technology costs, and a transition from active to passive management strategies. Over the past five years, North American and European firms experienced margin compression, exacerbated by unpredictable revenues and inflation. Despite increasing technology expenditures, firms struggle to link spending with productivity gains due to a focus on maintaining legacy systems rather than transformative initiatives. AI, particularly agentic AI, presents a transformative opportunity, potentially reducing costs by 25-40%. Successful adoption hinges on strategic integration, talent upskilling, and robust change management. Asset managers that embrace AI-driven transformations can enhance efficiency across functions like investment management and compliance, while building unified data platforms for better decision-making. Employing a structured approach grounded in six imperatives—domain-based transformation, talent optimization, and effective governance—can unlock significant ROI. Firms that act decisively will lead the sector, leveraging AI for sustainable growth and competitive advantage.
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