Technology's use during the COVID-19 pandemic has shown institutional investors how valuable and applicable innovation can be.
"You need a crisis to unlock the innovation. That's what you're living through now. Everyone has had to work remotely for over a year, so they've had to think about their tech stuff. That's why this is such a neat moment," said Ashby Monk, executive and research director, Global Projects Center, Stanford University, Palo Alto, Calif.
"I have never seen a period where there is more transformation happening than today," said Sudhir Nair, managing director, global head of Aladdin business in BlackRock Inc.'s solutions unit, New York. "And it is an absolute fact that COVID has accelerated this transformation."
Transitioning operations from offices to working from home and the market volatility during the pandemic "have put a spotlight on many organizations to become more efficient, to streamline operations and to think about their business model post-pandemic and think about ways to use technology both as a catalyst and a driver."
Ian Peckett, global head of buy-side product at Bloomberg LP, New York, said a lot of technology uses that were off the table pre-pandemic "have now come back on the table because people have proven they can work remotely. It's hard to argue that your portfolio manager has to sit next to your trader when for the last 18 months they've proven they can operate in whatever situation they've been in. It doesn't mean it's optimal but it does mean there's more optionality."
Money managers have already started making changes to take advantage of existing technology, Mr. Nair said.
"We've seen a lot of activity, really much more than we're accustomed to, in terms of organizations taking a step back and really rethinking their business model, recognizing that there's an opportunity to change their operating model, recognizing that there are new pools of growth for which they need to be well-positioned in order to capture, and then thinking through how to use technology as a lever to most effectively do that," Mr. Nair said. "It's a pressure, but increasingly it's an opportunity for institutional asset managers to find a way to differentiate themselves in a world where historically it had been increasingly hard to be differentiated from their peers."
Money managers won't be alone in looking to change their operations as a result of the pandemic, said Mr. Monk. "Asset owners, especially coming out of COVID, are going to be very focused on getting off spreadsheets and getting into software, and very focused in getting that software powered with reliable, single-source-of-truth data you can trust," Mr. Monk said.