Why are Institutional Investors Embracing the Cloud and Stronger Cyber Controls Now?
Institutional investors, including pension and sovereign wealth funds, are adapting to the evolving IT landscape by embracing new technology, cloud computing, and cybersecurity services. According to a recent report by Institutional Investor, organizations are increasing their investment in IT infrastructure to better manage risk, optimize returns, and stay ahead of the fast-paced tech landscape. Here are the top reasons they are making the change:
Digitalization is about optimizing business processes. Many investors seek to streamline their operations by implementing automated workflows, allowing them to work smarter – not harder. Digitalization also provides access to new investment opportunities, such as digital assets and cryptocurrencies.
Data analytics are essential for institutional investors looking to maximize returns and minimize risk. Institutions are leveraging data analytics to gain deeper insights into the performance of both managers and direct investments in their portfolios, assess outsized risk exposure, and identify opportunities for improved portfolio diversification.
Investors are taking cybersecurity seriously as they increasingly rely on digital solutions to manage their assets. Organizations that invest in cutting-edge cybersecurity solutions are protected against cybersecurity threats like phishing, ransomware, and other types of attacks.
Institutions are also beginning to adopt cloud computing solutions to improve efficiency, reduce costs, and enhance scalability. The public cloud adds tremendous operational flexibility by enabling investment teams to access their applications and data from anywhere, anytime — even when they’re offline. This makes managing their portfolios easier and more accessible, from manager selection to performance analysis and reporting.
The report also notes that institutional investors are increasingly outsourcing IT services to third-party providers to gain access to specialized expertise and reduced costs. Outsourcing also allows public asset owners to focus on their core competencies while leaving IT management to the experts.
This is a trend we’re seeing among fund managers as well. According to our recent 2022 Hedge Fund Managed IT Trends Report, 89 percent of firms that in-source their IT management today said they were likely to look to shift to outsourcing in the next two years. Key drivers for the change are to improve their security, access public cloud management, and improve their end-user support responsiveness. Outsourcing also allows firms to save time by leaving IT management to the experts.
Institutional investors are adapting to the evolving IT landscape by embracing the latest technology, cloud computing, and cybersecurity services. By investing in digitalization, data analytics, and by bolstering their cybersecurity, institutions can better monitor investment performance and manage business risk. As with our alternative investment client base, Agio stands ready to help institutional investors navigate the complex IT landscape to ensure their technology infrastructure is secure, reliable, and resilient.
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