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  5. Capital Markets / North American Buy Side IT Priorities and Strategy: Steering ambitions and staying steadfast through uncertain realities

Capital Markets / North American Buy Side IT Priorities and Strategy: Steering ambitions and staying steadfast through uncertain realities

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15 January 2024
Cubillas Ding
Janey Speed

Abstract

Continuing from previous year’s themes, buy side firms in the North American region are tackling tightened margin pressures resulting in reduced operating expenses ranking as an important strategic driver for IT spending. In comparison to global counterparts, North American firms are also allocating their budgets towards sharpening product and advisory offerings to discover unique investment propositions within highly competitive investment markets in the US and Canada. From a product investment perspective, the most significant priorities fall into the following categories – digital-augmented tools and channels for fund distribution as well as data and portfolio analytics considered necessary 'must have' investments.

Across the board, the evolution to leverage the cloud to upgrade and modernize is underway for North American investment firms. This is especially prevalent in mid-tier investment firms, with more than 77% of mid-sized firms are expecting to upgrade/ replace critical systems AND move more business-critical workloads to the cloud, significantly more pronounced than large peers and smaller firms in this region.

In many mid-sized entities, we observe a continued need to consolidate fragmented technology infrastructures due to historical legacy applications from M&A. Additionally, there are significant overlaps in strategies and sub-scale funds resulting from broad, unrationalized fund product footprints. Furthermore, unclear, and sub-optimal ‘AI-ready’ IT sourcing and data enablement approaches necessitate that medium-sized managers re-examine and re-focus their efforts in areas where they can differentiate their core competencies. Size alone does not automatically lead to scale, efficiency, and success. Instead, focus, specialization, and astute data-technology alignment are critical factors to consider. Given the prevailing macroeconomic uncertainty and headwinds, it is crucial for investment firms to carefully choose and focus on the appropriate combination of business use cases to integrate new AI, analytical, and data enablement capabilities.

Our research highlights on exactly which technologies, product investments, and strategic priorities North American buy side firms are focusing on, based on data from asset managers, hedge funds, pension funds, mutual funds, and sovereign funds. Despite the tough economic climate, buy side firms need to continue to actively invest and support varying innovative product initiatives.

This research is a companion study to Celent’s recent reports:

Capital Markets / European Buy Side IT Priorities and Strategy 2023

Capital Markets / Global Buy Side IT Priorities and Strategy 2023

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For more in-depth research around buyside, sellside and market infrastructure trends and technology insights, please explore Celent's Capital Markets practice.

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