Asset managers are investing more in technology but not necessarily with an optimal strategy. These investments have been growing by approximately 6 percent per year, according to McKinsey’s 2021 Global Asset Management Survey. Most asset managers focus their technology investments on coping with complex legacy technology estates that are increasingly expensive to maintain. But asset managers are more likely to build resiliency and meet today’s challenges if they pursue new efficiencies in maintenance spending—for example, moving on-premises technology to the cloud—and use the freed-up resources to invest in revenue growth opportunities.

Besides the cloud, the most promising technologies involve artificial intelligence (AI) and automation. All three of these are likely to make many asset managers uncomfortable, given the industry’s risk-averse nature and conservative pace of adopting technologies. But asset managers are more likely to stay competitive if they move outside their comfort zones and explore these technologies.