Almost three-quarters (73 per cent) of global institutional investors expect new technologies to reshape the industry by 2025, according to a new survey by Fidelity Investments Inc.
The survey, which polled more than 900 institutional investors in 25 countries, found 80 per cent of respondents expect blockchain and related technologies to fundamentally change the industry, while 62 per cent said new trading algorithms and sophisticated quantitative models will make markets more efficient.
While institutional investors believe artificial intelligence will make the industry more competitive, many have yet to allocate resources to it. One third of respondents have yet to start considering or testing how AI and advanced analytics could be useful to the investment process. This reality is especially reflected in the U.S., where 77 per cent of institutional investors have yet to begin to address AI. Areas where AI is expected to be helpful in the near term include asset allocation (69 per cent), performance/risk evaluations (67 per cent) and custom portfolio construction (39 per cent), according to the survey.
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“The transformation of the investment industry is within our sites due to expanding data sets, faster computing power and smarter technologies,” said Jeff Mitchell, chief investment officer at Fidelity Institutional Asset Management, in a press release. “As investing becomes more transparent and real time, the implications for asset allocation and portfolio construction will be profound. Asset allocation will evolve as clients’ needs become more complex, demanding more sophisticated and dynamic investment solutions.”
Indeed, about half (53 per cent) of respondents said they believe new technologies will replace existing roles in the industry. However, the human connection will remain important, with 60 per cent noting they expect AI will augment existing jobs rather than replace them.
“When we arrive at the intersection of humans and machines, it’s important to remember what is irreplaceable and that is relationships,” said Judy Marlinski, president of Fidelity Institutional Asset Management. “Asset managers who provide expertise and oversight will always be valuable to their clients, but they should also recognize their expertise has to evolve toward leveraging new technologies that can help their clients effectively meet their needs and objectives.”
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