Operating Model



IT models on a spectrum moving forward over time

IT deployment in investment firms has been substantially reactive, with firms trying to marshal technology to capture efficiencies in the face of legacy issues. The issue going forward is increasingly about developing the skills and procuring the systems to keep up in the technology arms race.


  • So far, IT has been helpful but not game-changing to investment firms. The Fintech Disruption scenario outlines how we expect smart machines and systems, data analysis, and inference to play a disruptive and at times destructive role in finance’s evolution, in the jobs performed, and in ways of working. This is emphatically the case with technology in distribution and strongly the case with technology applied to the investment process.
  • The spectrum of IT dependency by investment firms ranges from operating models that are simply IT supported to models where IT is central to the business model. IT dependency will steadily progress from the former to the latter state during the next 5–10 years.
  • Among our survey respondents, 31% say technology management is the most important factor in terms of strategic importance for investment firms in the next 5–10 years. In Asia, this figure is 40%.
  • Data and analytics strategies cover front, middle, and back office functions. A key decision is whether technology is bought or built. Control over costs is improved by outsourcing, but control over outcome is improved by insourcing, and these issues must be accurately appraised and balanced.
  • In this narrative, IT spending across the industry grows faster than revenue or other costs. Firms are likely to incur very high costs when adapting and replacing legacy systems to improve inter-connectedness and weak cyber-security.
  • Firms must meet the challenges introduced by fast-moving technology companies—often start ups that develop an innovative technology or process to address a part of the investment value chain in which there are inefficiencies or clients’ needs are not met.
  • A particular opportunity is for firms to use technology’s unparalleled reach to make customer relationships more personal and more service oriented.
  • In The Next Generation of Trust (CFA Institute 2018), the demand from retail clients for technology was seen to grow in every market and across every age group. In 2018, 48% of investors globally said that in the coming years, they want a tech platform to implement their own strategy more than they want human advisers to help them navigate markets. This is a fast-moving trend that firms ignore at their peril, even if people will still play a critical role.
  • A people-plus-technology model adds more value than either the people-only or technology-only models. People skills evolve to deepen situational fluency and machine-friendly interactions. The model is of technology serving the human elements—respect, transparency, communication, knowledge, experience, and trust—rather than trying to unwind or obscure them.