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State Street’s Annual Growth Readiness Research Reveals Institutional Investors’ Long-Term Forecasts Are Brighter Than A Year Ago Despite COVID-19

12/10/2020

BOSTON, December 10, 2020 — State Street Corporation (NYSE: STT) announced today the publication of its annual Growth Readiness Study, which surveyed more than 600 global institutional asset owners, asset managers and insurance company representatives to understand the challenges they face in achieving their growth objectives. This is the fourth annual Growth Readiness Study conducted by State Street.

Despite the impact of COVID-19, the survey found that clear majority of institutional investors (70 percent) were able to meet their investment performance targets over the last 12 months. Confidence in the one-year growth outlook has only dropped six percent since 2019, with half of respondents (49 percent) now optimistic about meeting their growth objectives over the next 12 months.

Long-term forecasts are bright, with just over three-quarters (77 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 geopolitical tensions, rising protectionism, increased cyber-attacks and a prolonged bear market due to the economic impact stemming from the pandemic will likely hinder expansion plans moving forward.

Improving productivity is the most important action for growth

Against this backdrop, respondents identified several actions as critical to achieving growth in 2021 including:

  • Elevating organizational productivity/capacity (72%)
  • Migrating more technology systems to the cloud (69%)
  • Increasing investment in new technologies instead of maintaining legacy IT systems (68%).

“Although 2020 has proved a trying year for many, our findings confirm that institutional investors believe the long-term future is bright,” said Francisco Aristeguieta, head of Institutional Services at State Street. “The COVID-19 crisis ushered in new operational complexities for the investment industry, which accelerated and intensified the search for resiliency and efficiency. Enhancing productivity and technologies will be key priorities for growth in the coming year for asset owners, asset managers and insurance companies, with outsourcing a critical way to achieve that. While many institutional investors are preparing to outsource more functions, they are likely to focus on fewer but deeper and more strategic relationships over the coming year.”

Consolidation of outsourcing partners to enhance scale and efficiency

Forty-eight percent of respondents said that relationships with outsourcing partners have strengthened in the last year as they have shouldered increased operational burdens and spikes with capacity demands due to the pandemic. Furthermore, over half of institutional investors (56 percent) are likely to outsource more activities that are not central to the pursuit of strategic goals and the same percentage plan to consolidate/reduce the number of outsourcing partners to focus on deeper, more strategic relationships in the next 12 months.

Alternative data is an increasing priority 

In addition, this year’s Growth Study also revealed that appetite for using alternative data (e.g. satellite images, social media posts, foot traffic and transaction data) to improve investment intelligence is growing, with 67 percent of respondents citing this as a bigger priority now due to COVID-19. However, 44 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 analyzing and understanding alternative data rather than looking to build their own in-house infrastructure.

“As institutional investors look to transform their operations, it is critical for them to harmonize and seamlessly manage data across the investment cycle,” added Aristeguieta. “Integrating front, middle and back-office solutions into one single platform can improve data consistency and efficiency, which helps lead to more informed business and investment decisions, as well as meets the increasing demand of regulatory reporting requirements.”

Remote working likely to be a long-term trend

Remote working arrangements have also gained a wider acceptance as a long-term strategy due to the onset of the pandemic, as just over half of institutional investors (55 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, almost two-thirds of respondents (63 percent) believe that their organization would likely allow all or most employees to permanently work remotely, while the same percentage of respondents said organizations would likely seek to reduce their physical footprint.

State Street Growth Readiness study, conducted by Longitude Research, surveyed more than 600 global institutional asset owners, asset managers and insurance companies during September and October 2020. To access the complete findings, click here.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $36.6 trillion in assets under custody and/or administration and $3.1 trillion* in assets under management as of September 30, 2020, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street's website at www.statestreet.com.

 

*Assets under management as of September 30, 2020 includes approximately $81 billion of assets with respect to SPDR® products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.

 

Important Information

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for decisions based on such information and it should not be relied on as such.

 

© 2020 State Street Corporation - All Rights Reserved

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Expiration date: 12/31/2021

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