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2025 is set to bring significant advancements in the software that powers financial firms. The industry's technological transformation is accelerating from the expanding role of artificial intelligence (AI) to the growing need for seamless data integration. Here, we explore the key technology trends that financial software providers must focus on to deliver value for their clients in the year ahead.
1. The (Continued) Rise of AI
AI is becoming integral to financial services, reshaping industry standards and creating new opportunities for asset managers. Early adopters are leveraging AI to enhance decision-making, optimise portfolio management, and improve operational efficiencies. AI is now used to support various processes, including investment research, risk assessment, and compliance monitoring.
However, careful implementation and continuous oversight are necessary to mitigate potential risks. In particular, Large Language Models (LLMs) in financial services need to be approached with caution. AI use must be considered against risks of financial losses, regulatory issues, and transparency. The effectiveness of AI-driven insights heavily depends on data quality. Inconsistent or incomplete data can hinder AI’s capabilities, reducing transparency and trust in automated decision-making. To maximise AI’s potential, firms must implement robust data governance and cybersecurity measures to safeguard sensitive information and ensure AI models are explainable and auditable.
2. Overcoming Data Fragmentation with Seamless Integration
One of investment managers' biggest hurdles is integrating data from multiple sources. Many firms still operate with fragmented systems that struggle to communicate with each other, leading to both financial and operational inefficiencies and increased risks. As a result, firms are prioritising data interoperability and system integration to create a unified financial technology ecosystem.
Firms require advanced analytics tools capable of processing vast amounts of data from diverse sources. The shift towards cloud-based data warehouses and software-as-a-service (SaaS) solutions is helping, but it isn’t enough. Firms must consider a holistic solution that handles all asset classes and operational processes on a single platform. They have to take the costs out of integration.
Firms can leverage an integration-first approach, ideally on a single control plane, to enhance data accuracy and gain real-time insights across their investment operations. A single source of truth improves decision-making and helps firms comply with evolving regulatory requirements.
3. Shifting Away from Custom-Built Solutions
For years, financial firms have relied on in-house-built systems tailored to their unique needs, requiring constant maintenance and updates. However, as technology advances and cost pressures mount, organisations need to transition from custom-built solutions. Firms must find a way out of the legacy approach and the cost that results by implementing a comprehensive, API-first, scalable and repeatable solution that is AI-ready. Modern investment management technology platforms offer data aggregation and workflow automation capabilities, allowing firms to move away from siloed, fragmented systems and repetitive manual processes. The benefits of a unified system, such as improved data consistency, reduced maintenance costs, and enhanced compliance, are quickly realised.
4. Building a Data-First Culture to Enhance Trust and Accuracy
Firms must cultivate a data-first culture, one that positions data management as a firm-wide responsibility. The foundations and toolsets adopted now will pave the way to the future.
Accurate performance calculations, regulatory compliance, and operational efficiency depend on high-quality, auditable data. Investment managers must empower teams with the necessary data literacy skills and foster a culture of accountability, ensuring that business users take ownership of data integrity.
Centralising data management and enforcing standardised methodologies across global offices can help firms maintain consistency and accuracy. By embedding data quality initiatives into day-to-day operations, firms can build a foundation of trust, which is critical for deploying next-generation technologies.
Conclusion
To be competitive, investment managers must drive innovation, enhance operational resilience, and ultimately deliver better outcomes for their clients. As the industry continues to evolve, firms that invest now in modernised, holistic, data-enabled ecosystems will position themselves to thrive in the future.
By Thomas McHugh, CEO of Finbourne
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