Nomura released a survey on Japan’s asset management companies (AMCs), which are confronting various challenges and formulate post-pandemic growth strategies. One section of the survey shows that remote working has been a difficult transition.
In terms of corporate functions, many AMCs, particularly foreign ones, reported difficulty generating new investment ideas and developing new products because of internal communication deficiencies.
In the front office, many mostly Japanese respondents feel that trading operations are not conducive to remote working. Trader’s telework rate is low according to the survey’s quantitative data. Although trading can be done remoted, many traders presumably prefer to work at their office from the standpoint of efficiency and reliability.
Some survey respondents said they are considering splitting trading staff between their office and a disaster recovery site. Outsourcing is another option, but Nomura’s researchers wrote: “we doubt many AMCs would immediately resort to it, considering that trading is a source of added value and that AMCs benefit from maintaining relationships with brokers.”
Urgent back office challenges include key-man risk with respect to certain business processes and the continued existence of paper-dependent processes. Solutions include: automation, migration to paperless operations and outsourcing.
“AMCs are unlikely to be forced to rethink their approach to their core function of portfolio management revolving around investment decision-making. Company cultures and investment philosophies cultivated in in-person settings, however, may be hard to perpetuate in a teleworking environment, though not many AMCs seem to realize it yet.”