Operating Model



Further innovation in technology

The one inviolable innovation truth is that we cannot visualize the next wave of technology. Because technology is so transformative, the issue is how investment firms build innovation infrastructure and culture to keep up with the trends and be adaptive.


  • Although it is best to be humble in identifying trends as far ahead as 5–10 years, here are three areas to watch:

    • Artificial intelligence (AI) and machine learning will become smarter in hard-to-anticipate ways. This dynamic has implications for governance and ethics, particularly if AI gains wider influence and autonomy.
    • Agent-based modeling is a method of identifying factors affecting outcomes in the investment ecosystem. It has relevance to regulators and industry firms alike.
    • On top of blockchain’s ability to distribute trust in many administrative and transaction settings without traditional counterparties, regtech is a particular application of blockchain that could have significant influence, in terms of both what regulators do and how investment firms conduct their compliance.
  • AI will have substantial impact. Intelligence in this context is the ability to acquire and apply knowledge and skills that currently lie on a spectrum from a) people doing routine and creative tasks supported by machine intelligence to b) people performing creative intelligence tasks augmented by smart machine intelligence to c) autonomous machines completing creative tasks (e.g., trading strategies).
  • It is likely that this new sort of machine intelligence is self-organizing, ever-adjusting, and largely but not wholly autonomous. Across their business and portfolio applications, investment firms will increasingly draw on building blocks of intelligent functions. The prime example is blockchain, which conceptually involves building blocks that create and distribute trust in the system.
  • Among those surveyed, 21% say that their firm’s top tech priority in the next 5–10 years is the use of machine learning technologies in portfolio construction. The survey showed Asia has greater awareness and familiarity of the technology opportunities relative to other regions.