State Street: Long-term forecasts for institutional investors brighter than a year ago despite COVID-19

December 11, 2020

State Street Corporation announced the publication of its annual Growth Readiness Study, which surveyed more than 600 global institutional asset owners, asset managers and insurance companies / company representatives, 39 percent of whom are from Europe, to understand the challenges they face in achieving their growth objectives. The study was conducted during September and October 2020.

Key findings:

• Long-term forecasts are brighter than a year ago despite COVID-19: Long-term forecasts are bright, with just over three-quarters (76 percent) optimistic about achieving their growth targets in the next five years, representing a 10 percent increase from 2019 – even though the majority believe that new regulations or taxation as a result of COVID-19 or an economic recession and vendors’ financial vulnerability will likely hinder expansion plans moving forward. Somewhat surprisingly, only 34 percent of European respondents are worried about geopolitical tensions being a top threat to growth, compared to 40 percent globally.
• Improving productivity is the most important action for growth: Respondents identified several actions as critical to achieving growth in 2021 including elevating organizational productivity/capacity (71%); migrating more technology systems to the cloud (68%) and increasing investment in new technologies instead of maintaining legacy IT systems (68%).
• Alternative data is an increasing priority: The Growth Study revealed that appetite for using alternative data to improve investment intelligence is growing, with 62 percent of European respondents citing this as a bigger priority now due to COVID-19. However, 41 percent of respondents are concerned they do not have the necessary capabilities and tools in place to make the best use of this data, and as a result many are looking to external specialists for help with analysing and understanding alternative data rather than looking to build their own in-house infrastructure.
• Remote working likely to be a long-term trend: Over half of European institutional investors (53 percent) view increased moves to more remote working arrangements for employees as an opportunity, versus 19 percent who see it as a threat. To that end, 57 percent believe that their organization would likely allow all or most employees to permanently work remotely, while 62 percent of respondents said organizations would likely seek to reduce their physical footprint and 50 percent will look to move more low-value business processes to offshore service centers.