In today’s rapidly evolving asset management industry, transformation is more than just a buzzword; it’s a necessity.
As the world changes, driven by increasingly uncertain economic conditions, rising cost pressures, changing investor behaviour, and emerging technologies, so too must the strategies and operations of asset managers, as they respond to the unprecedented growth of major superannuation funds and other institutional investors.
We explore the key aspects of preparing for transformation, focusing on the trends shaping the industry and the steps necessary to stay competitive.
Key trends shaping transformation in Australia
Australia’s investment landscape is experiencing unprecedented growth, with total funds under management now exceeding AUD $4 trillion.[1] This figure is largely driven by the expansion of the superannuation sector, underpinned by contributions made to employees under Australia’s compulsory Superannuation Guarantee. This growth highlights the increasing need for transformation among asset managers, who support these funds, to maintain a competitive edge and meet evolving expectations.
“Custodians and asset servicers must accordingly adapt and grow to match the increasing needs and volumes of the superannuation and wider investment industry in Australia and New Zealand,” says Mr Narayanasamy.
As the market grows and matures, external factors such as economic downturns, market volatility, and global competition will shape the future of the industry, underpinned by the following key trends.[2]
- Growth in assets under management: the volume of assets under management in Australia has grown five-fold over the past 20 years, outpacing many other regions. However, as the market matures, the rate of growth is expected to slow. Asset managers must adapt to these changes by focusing on sustainable growth strategies and anticipating market shifts.
- Continuing consolidation of superannuation funds: The competitive market has led to the ongoing consolidation of smaller superannuation funds into larger entities. This trend enables cost reduction, improved efficiency, and access to a broader range of investment products, driving increased expectations for the asset managers who support them.[3]
- Operational risk management: The rise of digital tools, a multi-vendor environment and automated processes, coupled with a complex regulatory environment, has increased the risk of operational issues. Asset managers need to invest in robust risk management frameworks to safeguard their operations and maintain investor trust. Ensuring long-term sustainability in an ever-evolving market is crucial.
- The role of AI: Many organisations are embracing artificial intelligence (AI) to try and improve client service. AI has many advantages including cost reduction, risk management, processing speed, scalability – the possibilities are almost limitless. Data transfer, data services, and integration technologies have evolved significantly and can now incorporate data lineage, quality, and governance methods, enabling AI to provide more comprehensive insights from data rather than merely delivering it for a specific downstream system or report.[4]
Top five success factors for transformation
In preparation for transformation, we believe success is not just about executing change; it’s about co-creating the transformation strategy from the start – and designing it in partnership. Asset managers and their partners need to ensure that every step is aligned with business priorities while minimising risk. A solid partnership is essential for managing the increasing complexity and diversification of assets.[5]
“Being a change champion for clients is fundamental to ensuring end-to-end execution, delivering their objectives with efficiency and managing their operational risk. This means taking ownership of the operation, the transformation, and importantly, the service,” says Mr Ouafik.
1. A fully integrated governance model
A fully integrated governance model allows asset managers to understand their clients’ challenges as if they were their own, anticipate risks before they emerge, and ensure that every transformation is delivered within time and budget.
Clients will increasingly need their partners be their change champion, and think like their chief operating officer, delivering transformation in a way that allows them to stay focused on their front-office priorities and core business activities. Custodians, for example, have evolved from traditional asset safekeeping roles to becoming partners and strategic enablers in client operational transformation.
2. Leveraging technology and expertise
The integration of AI, automation, and real-time data insights is revolutionising the asset management industry. These technologies improve efficiency and decision-making, enabling asset managers to provide personalised experiences and better engage with clients. Combining technology with deep industry expertise and a robust governance framework is one key to successful transformation.
3. Achieving interoperability
Understanding an asset manager’s operating model is fundamental. This involves comprehensively analysing data sets, workflows, timings, reporting mechanisms, and dependencies. Achieving interoperability is crucial, and while there are many solutions, finding a common one is the ultimate goal.
Application programme interfaces (APIs), for instance, may be ideal, but asset managers and their partners must carefully consider cybersecurity, proprietary builds, and data privacy. The solution architecture ecosystem must be designed to fit and integrate these bespoke requirements followed by validation through workshops, reviews, and approvals from all stakeholders.
To ensure effective change management, it is essential to implement a comprehensive approach that includes training, provision of reference materials, hands-on usage experience, and user-friendly navigation.
4. Navigating regulatory challenges
The evolving regulatory landscape presents both challenges and opportunities for asset managers. Governance and regulation continue to shift in line with the growing significance of the superannuation sector, which now manages over AUD $4 trillion in retirement assets for Australians; protecting these assets is paramount.
As a result, the demand for timely, accurate, and transparent data continues to grow. Asset managers and their service provider partners must evolve their capabilities to meet these expectations, ensuring data delivery remains reliable and fit for purpose.
Strong governance is also essential for managing cybersecurity and data privacy risks. Balancing the rapid deployment of new technologies with ongoing regulatory compliance, both locally and globally, is critical to maintaining trust and operational resilience.
5. Risk management
Asset managers should be aware of potential risks during transformation. For example, digital tools and complex regulations increase operational failure risks such as cybersecurity threats and data breaches. Robust risk management is essential. While improving efficiency, mergers and acquisitions among asset managers may reduce innovation and diversity, and impact investment strategies. Asset managers must remain agile and offer diverse products to stay relevant.
AI and automation enhance efficiency, but they can come with risks. By addressing these risks proactively, asset managers can achieve their transformation goals.
The path forward for asset managers
BNP Paribas’ Securities Services business has successfully transformed its custody platform to better serve clients, by integrating the latest generation technologies in AI, digital tools, and data services. This transformation has resulted in greater efficiency, reduced risk, and faster interactions.
Engagement with industry partnerships and ventures helps foster innovation and collaboration – not only with clients, but also peers, start-ups, vendors, and market infrastructures. It allows leverage from innovative technologies from fintechs while efficiently connecting with leading market providers to enhance capabilities and better serve clients.
“Increasing complexity means that asset managers need a stable, integrated partner who can be part of the team, understand the needs of their strategy, and support their growth and transformation,” says Mr Ouafik.
Preparing for transformation in the asset management industry today requires a comprehensive approach that includes understanding key trends, building integrated models, leveraging technology, fostering innovation and navigating regulatory challenges. By focusing on these areas, asset managers can remain competitive and deliver value to their clients and build strong partnerships which can lead to successful transformations in the asset management industry.
[1] APRA releases superannuation statistics for December 2024 | APRA
[2] Global Pension Assets Study – 2024 – Thinking Ahead Institute
[3] Shaping Super: Insights for superannuation success in 2025
[4] Leveraging artificial intelligence (AI) to the benefit of clients’ performance – Securities Services
[5] Defining new operating models: a view from Australia – Securities Services