By Jack Niven, VP North America, Autorek
Asset management faces a fundamental challenge that boardrooms consistently overlook. While firms invest heavily in client-facing technology and trading capabilities, their operational infrastructure is quietly reaching a breaking point.
Nearly four in five asset managers are struggling with current back-office processes or at least acknowledge they will be overwhelmed if data volumes continue to rise. And it is rising, according to AutoRek’s recent asset management report, which shows an expected 39% increase in daily transaction volumes over the next two years, threatening an industry-wide, operational strain on the horizon.
The investment paradox
These same firms are pouring resources into sophisticated front-end platforms and AI-driven investment tools, while more than half still manage critical data processes through a combination of spreadsheets, in-house systems, and legacy software.
Legacy software might have sufficed when transaction volumes were manageable but as markets evolve to a shift to T+1 settlement and the introduction of 24-hour trading windows, it becomes a critical failure point.
The elimination of any buffer time that previously masked operational inefficiencies, when markets operate around the clock, render back-office processes that take hours to complete, operationally impossible.
Yet, from an operational standpoint, many firms continue to function as if the market tempo hasn’t fundamentally changed.
Volume growth meets system constraints
In this environment of opposing priorities, that anticipated 39% increase in transaction volumes would push many existing systems beyond their practical limits.
Add in digital assets and the challenge is compounded, and yet 88% of firms are likely to invest or already invest in digital assets, according to AutoRek’s research.
Cryptocurrency transactions require precision to 18 decimal places, compared to the 2-8 decimal places typical in conventional assets, meaning systems are further entering territory they were not designed to handle.
As systems are pushed beyond their limits, it’s worth questioning whether firms fully grasp what they’re signing up for when they add digital assets to their portfolios.
The real cost of manual processes
Manual processes represent a significant factor in workload challenges for 51% of firms. This creates a cycle where talented professionals spend time on repetitive tasks rather than strategic analysis or client service.
But some firms argue that manual oversight provides control and understanding that automated systems can’t match, expressing concern about black-box solutions that process transactions without human insight.
At the same time, manual data processing introduces human error into financial controls, especially as transaction volumes increase and settlement windows compress.
Realistically, the balance likely lies in the middle as regulators increasingly expect firms to utilize automated controls.
Technology as operational foundation
The firms positioning themselves for future success are those dedicating resources and investing in the backend and recognize that operational technology isn’t an overhead, it’s competitive infrastructure. When your back-office processes can handle volume surges seamlessly, while competitors struggle, you gain market advantage.
Challenges caused by inadequate systems and software availability are also solvable, but they require investment in operational infrastructure at the same level as investment research capabilities.
Budget allocation reflects growing recognition—96% of firms expect automation budgets to increase or remain stable over the next two years, according to AutoRek’s research. Yet budget allocation alone doesn’t guarantee effective implementation.
The key lies in incremental modernization that integrates with existing infrastructure while progressively eliminating manual processes.
Market reality check
The hidden crisis many asset management firms are facing isn’t abstract — it’s a current reality.
Antiquated processes in the face of significant volume increases means managing substantial operational risk – a risk many have managed successfully for years, which has caused complacency and/or denial.
The timeline for addressing these challenges is also compressing, making operational margin for error disappear.
Firms that modernize their infrastructure proactively will handle future volume growth smoothly. Those that delay risk failure during periods of peak activity.
The market won’t wait for firms to catch up, and clients won’t tolerate operational disruptions. The operational foundation ultimately determines whether firms can capitalize on growth opportunities or become casualties of their own success.
The statistics referenced in this article are drawn from AutoRek’s “Trends in Asset Management Operations 2025” report, which surveyed 250 senior managers across US asset management and capital markets organizations.
