How Does ALTO Address Asset Servicing Challenges?
With the market size expected to reach, asset management industry is continuously growing while facing increasing competitiveness, regulatory and technological challenges that could impact the industry profitability. One solution: offshoring non-core functions to external service providers with operational expertise, robust infrastructure and cloud-ready technological solutions. This new market trend represents a huge opportunity for asset servicer, who are already the main service provider to asset managers. It helps reduce operational costs while benefiting from regulatory expertise and a strong technological foundation that enables economies of scale. Insights with Christian Lath, Strategic Product Manager Asset servicing, Data and Reporting at Amundi Technology.
Asset Servicing: A Market in Full Transformation
“As a generic term, asset servicing refers to the full range of products and services that an asset servicer provides to its clients (asset manager, asset owner, etc.). As a financial intermediary and service provider, the asset servicer offers essential services that contribute to securing the asset management industry,” explains Christian Lath.
The figures are clear and irrevocable, globally regulations have considerably evolved, pushing asset servicer to strengthen financial controls (MMF, ELTIF etc..), non-financial controls or sustainability (SFDR, CSRD, ESG rating etc..). In this context, Amundi Technology aims to support asset servicer on this industry transformation by proposing with the platform Alto a targeted offering focused on specific asset servicing functions.
Alto asset servicing platform can be deployed in SaaS or on premise to our clients and already complies with global and local regulations (UCITS, AIFM, Italian pension etc.) managing over than 30000 investment restrictions rules.
We are proud to count as client and user 3 of the top 10 leading European asset servicer who manage their trustee and investment restriction controls activities in our platform.
40% of asset servicers value digital capabilities as a top-three criteria2 for enhanced operations and/or client experience. This expansion is driven by ongoing transformations in the asset management industry, as well as the operational, regulatory, and technological challenges faced by asset managers and asset owners. “We are seeing asset managers increasingly offshore certain functions—particularly support functions—to asset servicers that have the necessary tools, infrastructure, and expertise. This allows asset managers to focus on their core business and generate added value,” explains Christian Lath.
Between a Competitive Market and Regulatory Requirements, Offshoring in Asset Servicing as a Solution
In a highly competitive environment, the European asset management market is expected to reach $43.8 trillion by 2029, with a CAGR of 5.26% during the forecast period from 2024 to 2029[1]. To remain competitive, achieving critical mass is essential. “The decision to outsource certain support functions—such as data management, middle office operations, risk calculations, and compliance—is crucial for leveraging economies of scale. Mid-sized players (tier 2, 3, and beyond) face greater challenges in maintaining these functions within their organizations. As a result, they turn to offshoring to leverage the robust infrastructure and expertise of external providers, benefit from economies of scale, and focus on their core business—creating value to stay competitive in the market. At Amundi Technology, we observe a growing trend toward offshoring and outsourcing, particularly in asset servicing. That’s why we offer them a cloud-ready infrastructure,” says Christian Lath.
Cloud-Ready: The Technological Solution to Asset Servicing Challenges
Depending on the services offshored by asset managers to asset servicer, Amundi Technology in Alto asset servicing platform can customize multiple modules to meet clients’ specific needs. Indeed, we can offer front-to-back solutions, with a range of modules ranging from data management, front and middle office solutions, risk and performance solutions and finally investment compliance solutions.
“At Amundi Technology, we understand the challenges asset servicer face and provide tailored support to address the three key issues of competitiveness, regulation, and technology, and developing functionalities to meet asset servicers needs remains a major focus of our product strategy”, concludes the expert.
1 https://www.mordorintelligence.com/fr/industry-reports/europe-asset-management-industry
2 Source: Broadridge, worldwide open ended funds (mandates, dedicated funds and employee saving schemes excluded), As of end of September 2021, versus 2017.
