According to Linedata’s Global Asset Management and Administration Survey, cybercrime is seen as the greatest business disruptor over the next five years. Over a third of respondents (36%) noted conceren about the threat from cyber criminals.

While cybercrime is a major fear for a growing number of asset managers, regulation remains the most serious ongoing concern, with 58% of respondents citing the adaptation to new regulatory regimes as the top challenge facing their firm. This was closely followed by cutting costs and maintaining operational efficiencies, which is now the main challenge for 43% of respondents, increasing from 32% in 2013. In contrast, there has been a declining emphasis on maintaining investment performance, falling by 23% over the last three years.

The focus on staff retention has grown consistently, from just 7% of respondents citing it as a key challenge in 2013 to 16% today. This trend shows no sign of abating, with 22% of respondents also predicting that it will continue to be a major priority over the next three years. Rapidly growing markets, such as the Asia Pacific region, are particularly motivated in this regard (29% of respondents identified it as a major challenge).

“While the key challenges of managing regulatory change and maintaining operational efficiencies remain at the fore, the threat from cyber criminals has been added to asset managers’ growing list of concerns,” said Michael de Verteuil, head of Business Development at Linedata. “The increasing importance placed on hiring the best and the brightest is also on the agenda of prominent challenges: as the financial system flourishes, the ‘war for talent’ has begun in earnest”.

Just 8% of respondents see blockchain as having the greatest potential for disruption and risk to the asset management industry over the next five years. This reflects the uncertainty surrounding this technology and its potential applications.

Client service is seen as the key way in which players in the asset management space distinguish themselves from the competition, with performance and product offering also important factors.

The rise of passive investing is reflected in the survey, with 35% of respondents identifying ETFs as the strongest candidate for growth over the next 12 months. Derivatives/derivative overlays were also a popular choice (32%), and the overall spread of new in-demand products reflects the trend of broadening portfolios.