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Use of artificial intelligence (AI) can boost efficiency and entrenched cost structure of Asset managers noted a report by McKinsey & Company.
As per the report it is a timely opportunity for asset managers to embrace AI effectively to streamline operations and leapfrog profitability levels. It stated that "For asset managers, the AI revolution is a timely opportunity to break out of entrenched cost structures by increasing efficiency across business functions". The report shared an approach grounded in six core imperatives to help asset managers capture the full value of AI in their businesses. The first pillar revolves around domain-based transformation. The report stated that instead of pursuing fragmented use cases that deliver incremental change, asset managers can reimagine organizational domains through a zero-based, AI-enabled redesign of workflows. This approach has the potential to unlock AI's true capabilities in driving structural efficiencies. The second imperative is revamping talent strategies and operations. Like any new technology, AI brings fresh challenges for workforce management. The report shared that the firms will need to embrace organizational change and update their talent strategies to ensure seamless integration of AI into their daily operations. Another key aspect is optimizing operating models. The report noted that among leading asset managers, the most effective approach has been governance models that blends centralized oversight with decentralized experimentation and delivery. This balance ensures both efficiency and innovation. The fourth pillar is maintaining control of technology road maps. By transforming IT from a mere enabler into a competitive differentiator, asset managers can unlock higher productivity and sustain their advantage in a rapidly evolving landscape. The fifth imperative is developing strong data strategies. Since AI integration depends heavily on decentralized data and robust technology ecosystems, firms will need to redesign their data governance practices to fully realize AI's potential. Finally, enabling cultural shifts and change of management is critical for effective adoption. The report stressed that successful AI adoption requires gradual adaptation, structured support, and behaviour rewiring. The report also pointed to the transformative potential of agentic AI, which presents a once-in-a-generation opportunity for asset managers to recover margins. Giving example the report stated that a mid-sized asset manager with USD 500 billion in assets under management (AUM) could capture between 25 to 40 percent of its total cost base in efficiencies by leveraging AI-enabled, end-to-end workflow reimagination. So the report outlined a clear message that those who act decisively and invest across all six pillars will be best positioned to thrive in the AI-driven future of asset management. (ANI)
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