Digitalization and Sustainability: new challenges for an Asset Manager

In the current era, which is subject to sudden changes in both social and economic terms, the asset management industry is constantly evolving. Decreasing margins, regulatory burden, changing client behavior, increasing customer demand for greater autonomy in accessing reports, and sustainability and digitalization agendas are the new trends driving the implementation of more cutting-edge solutions. The financial landscape has realized that digitalization is a mission that can no longer be postponed. Artificial intelligence is a device that asset managers are more and more turning to as it adapts to evolving financial markets.

AI strategies have several advantages, including reliability, robustness, and adaptability. Adopting AI models in asset management protects against market uncertainty and volatility. Indeed, financial institutions, which apply AI strategies, can quickly and inexpensively verify consistency with client risk levels before applying the strategy in the markets. Continuous supervision by the asset manager then ensures that the strategy and risks are always monitored but with a structure that is user-friendly.

Asset managers are still responding to these new demands by increasing portfolio diversification through alternative investments (hedge funds, private capital, natural resources, real estate, infrastructure) by selecting socially responsible investments that take ESG criteria into account. The goal is to generate competitive, long-term financial returns and a positive societal impact. Not an easy challenge. Indeed, it is not straightforward to actively participate in creating a more sustainable, fair, and inclusive future without having a single standard for SRIs. An issue of transparency exists because sustainability formats are so many and there is lack of harmonization at a common level.

So, as emerged, asset managers these days are called upon to adopt a holistic approach that incorporates multiple factors. The main task an asset manager must fulfill remains to ensure the right balance between transparency, cost efficiency, maximum return, and low operational risk.

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