nstitutional investors are increasingly recognising the potential of emerging technologies such as artificial intelligence (AI) and digital assets, but concerns over cybersecurity and AI-driven threats remain at the forefront. These were the key findings from a live poll survey conducted during Northern Trust’s recent technology symposium, ‘Tech Horizons: Exploring the Future of Innovation,’ held in London on 17 September 2024.
Over 100 investment professionals and industry consultants attended the event, where experts from Northern Trust and the broader financial sector discussed how technology is transforming the investment landscape. Topics included the use of data as a strategic asset, the digitisation of traditionally illiquid assets, and the impact of cloud technology and AI on future investment strategies.
One of the key insights from the survey was that 34% of respondents have either already added or plan to incorporate digital assets into their investment portfolios. This move reflects the growing appeal of digital assets as a means of diversification and innovation within the investment community. These assets, often seen as volatile or speculative, are now being viewed more strategically, with investors considering their potential to bring new efficiencies to portfolios.
The survey also revealed that 66% of participants believe that private assets, such as equity in privately-held companies, will benefit the most from the shift towards digital formats. Real-world assets, including commodities and property, followed closely with 53%, and money market funds at 36%. This shift underscores the broader industry trend of using technology to digitise traditionally illiquid asset classes, unlocking new opportunities for value creation.
However, alongside the enthusiasm for innovation, there are significant concerns. A striking 88% of those surveyed identified cyber risk as a major issue for their organisations. As financial institutions increasingly rely on technology and digital assets, the threat posed by cyberattacks continues to grow. The rapid advancements in AI have also led to concern, with 81% of respondents expressing high or moderate worry about AI-driven threats or attacks.
Despite these risks, AI’s potential to transform the investment industry was another key focus of the symposium. More than one-third of respondents believe that AI could significantly enhance portfolio optimisation, improving investment strategies and outcomes. AI was also identified as a game-changer in the realms of manager due diligence (26% of respondents) and risk management (21%), highlighting its broad potential across various aspects of financial operations.
“These findings highlight both the opportunities and challenges faced by our clients as they navigate the ever-evolving data landscape,” said Pete Cherecwich, Northern Trust’s incoming Chief Operating Officer. “As digital assets and advanced technologies become more integrated into the investment world, we are committed to supporting our clients in managing these dynamic changes.”
Despite the widespread recognition of data’s importance, the survey revealed that only 62% of respondents currently have a data strategy in place. “This reveals a significant gap between the value investors place on data and their ability to effectively use it within their business,” said Kelley Conway, head of Corporate and Digital Strategy at Northern Trust.
As the investment landscape continues to evolve, Northern Trust’s symposium underscored the need for firms to balance the promise of new technologies with the critical importance of robust cybersecurity measures. The event highlighted both the risks and rewards that lie ahead for investors in an increasingly digital financial world.
