Investment managers (IMs) across the globe are confronting a technological transformation that will determine their competitive survival in 2025 and beyond. As IMs consolidate vendors and look to outsource to reduce the total cost of ownership, IM technology providers need to expand up and down the IM life cycle to maintain their standing with a population of 20,000 plus IMs worldwide. (The term IM includes asset managers and asset owners – i.e. insurance companies that both internally and externally manage money).
The Architecture of Modern Investment Management Under Pressure
The traditional monolithic approach to IM technology is demanding reengineering, a rethink. As the buy-side continues to expand into multi-asset classes and, out of necessity, is taking on more front-to-back transactional functions of the investment management life cycle. This expansion isn’t merely a strategic choice—it’s an operational and cost imperative driven by market pressures and client demands that threaten firms slow to adapt.
Complete, reliable, and efficient investment management remains the definitive goal, but the pathways to achieving it have multiplied dramatically. IMs now confront several viable yet complex approaches: in-house builds, third-party platforms, outsourcing arrangements, and various hybrid combinations. Each option presents distinct advantages and risks that demand immediate evaluation, as delays in decision-making compound operational inefficiencies and loss of market share.
The API Revolution Transforms Competitive Dynamics
The most sophisticated IMs are leveraging core platforms and services to handle common noncompetitive functions while deploying interconnect APIs tailored to order management system (OMS), execution management system (EMS), and order and execution management system (OEMS) modules. This strategic approach allows firms to address unique market conditions, volume requirements, latency demands, and competitive requirements without rebuilding entire technological infrastructures.
This API-centric architecture represents more than technological modernization—it’s a reimagining of how investment operations scale and adapt. Firms that master this interconnected ecosystem gain significant advantages in speed, flexibility, and cost management, while those that lag face mounting operational disadvantages that directly impact their ability to compete for assets and talent.
Technology Spending Signals Market Urgency
Despite economic uncertainties, global OMS IT spending reached nearly US$2.3 billion by the end of 2024, with projections indicating growth to US$2.375 billion by 2025. This continued investment underscores the critical importance IMs place on technological capabilities, even as they face pressure to reduce costs and improve operational efficiency.
The sustained spending reflects a sobering reality: firms cannot afford to delay technology investments without risking their competitive position. Those that postpone essential upgrades face compounding challenges as market complexity increases and client transparency expectations continue to rise.
Market Consolidation Intensifies Competitive Pressure
The vendor landscape reveals a healthy but competitive environment, with mergers and acquisitions aimed at expanding capabilities and meeting evolving client needs. This consolidation trend forces IMs to carefully evaluate their technology partnerships, as vendor stability and long-term viability become critical considerations in platform selection.
IMs need to execute and manage investment orders while seeking integrated, cost-effective solutions across the investment life cycle. The challenge lies in identifying vendors that can provide comprehensive capabilities without creating vendor lock-in or operational dependencies that constrain future flexibility.
Cloud-Native Platforms Reshape Investment Management Standards
With traditional asset managers and hedge funds representing 69% of the client base, the pressure to expand across asset classes and geographic markets intensifies. IMs must implement technology platforms capable of handling increased complexity while maintaining operational efficiency and regulatory compliance across multiple jurisdictions, while also opening up new distribution channels.
The shift toward cloud deployment has overtaken the buy-side, with even low-latency trading operations moving to cloud-based infrastructures. This transition creates opportunities for improved scalability and cost management, but also requires careful evaluation of platform capabilities and vendor relationships.
Rising Operational Risks Threaten Business Continuity
IMs face mounting operational risks from fragmented systems, manual processes, and inadequate integration capabilities. These challenges create vulnerabilities that can impact investment performance, client satisfaction, and regulatory compliance—risks that become more severe as investment strategies grow more sophisticated and portfolios expand.
The need to consolidate disparate systems and reduce operational risk drives technology investment decisions, but implementation challenges and integration difficulties can create short-term disruptions that affect business continuity. Firms must balance the urgency of modernization with the need to maintain stable operations during transition periods.
Investment Operations Efficiency Drives Competitive Advantage
IMs can no longer delay critical technology decisions without accepting significant competitive disadvantages. The firms that thrive will be those that recognize technology not as a cost center but as a strategic enabler of their core investment mission.
Successful firms must adopt modular implementation approaches that allow incremental improvements while maintaining operational stability. This strategy enables organizations to prioritize critical functions while building toward comprehensive platform modernization over time.
Ready to understand how leading IMs are navigating these critical technology decisions? Explore the comprehensive analysis in our recent Datos Matrix: Buy-Side Order Management Systems 2025 report for detailed insights into vendor capabilities, market trends, and strategic recommendations that can guide your technology investment decisions. And for an overview of the reengineering of the investment management life cycle and current technology accelerators catalyzing the process, please see our report, Fintech Rearchitecting Investment Management: IBOR, APIs, Accelerator Components, and Workflow Technology.
