Tech trends reshaping alternative asset management

Each year, Accenture looks at innovation in a far-reaching report. This year’s edition, Technology Vision 2024: Human by design, highlights how emerging technology unleashes human potential, productivity and creativity through four trends. 

Let’s examine the specific value creation opportunities for alternative asset managers—and how they’re reshaping the industry.

1. Adding a new advisor to your team

Leveraging the latest and greatest in computational power, generative AI uses the vast amount of data it was trained on to help curate informed responses to the initial query. This speeds up the initial knowledge gathering process. It reduces cycle time while enabling users to arrive at more insightful questions and decision-making. 

Thanks to this advisor ability, generative AI offers a wealth of applications for deal teams. In deal sourcing, teams can get AI assistance in developing investment theses and portfolio optimization and diversification. During the due diligence phase, AI can assist with risk assessment and competitive analysis, allowing teams to spend more time on deeper analysis, scenario builds and value creation plans. The possibilities stretch across the deal lifecycle through to monitoring portfolio performance, anticipating exit readiness and identifying potential buyers.

Another popular application involves using generative AI as the backbone of robust knowledge management ecosystems. This can be aimed at thematic research or analysis, investment sentiment analysis, real-time performance and risk visualization, investment signal learning, relationship intelligence and leadership recommendations. 

Additionally, large language models (LLMs) can be trained using private databases and public information to accelerate analyses and deepen strategic thinking for private companies. Ultimately, these applications increase lead generation and reduce time-to-decision, boosting overall fund performance.

With all the exciting prospects around generative AI, it’s important for alternative asset managers to not only consider how best to apply this transformational technology, but also to identify and cultivate the right skillsets and talent.

The main concern among workers is whether organizations will ensure positive outcomes for everyone. Comparative analysis of adoption and innovation scenarios shows that $10.3 trillion in additional economic value can be unlocked by 2038—if organizations adopt the technology responsibly and at scale.

2. Accelerating productivity through agents

Machines make up 43% of identities on enterprise networks today. Increasingly, these act as agents that not only assist and advise, but also take actions in both the physical and digital worlds. Working together, they multiply the collective output of workers and generate immense value for enterprises that choose to participate.

Almost all executives (96%) agree that leveraging AI agent ecosystems will be a significant opportunity for their organizations. As digital agents are integrated into day-to-day life, productivity is bound to accelerate. In turn, asset managers that invest in them will be freer to focus on broader strategic initiatives such as identifying unique and robust investment themes.

For one private equity client, we developed a self-learning model that allowed any due-diligence question deemed repeatable by their legal team to get an automated answer. This resulted in a 35% efficiency gain, allowing the deal team to concentrate on specific areas and identify opportunities for value creation. Asset managers can also implement these technologies at portfolio companies (PortCos) to improve operational efficiencies and achieve higher returns on their investments. 

3. Creating immersive experiences

Spatial computing is creating immersive worlds—more personal and interactive than ever before—by extending the physical with things like the metaverse, digital twins and AR/VR technologies. Although this gained early relevance in the gaming, retail and consumer products space—with companies investing heavily in its development—there are applications for asset management. In particular, it can help create more immersive experiences for employees, in investor relations, portfolio experience and review.

Let’s consider internal applications first. Spatial computing applications can deliver a more human experience in virtual, dispersed working by creating co-working locations for onboarding, training or collaboration. The ability to more naturally brainstorm and exchange ideas in a new channel provides incremental opportunities to experience products and services. 

The creation of digital twins now offers the ability to turn complex scenario analysis into simulation and true visualization that wasn’t accessible with earlier technologies. This drastically reduces modeling efforts, research and development timelines and capital expenditure demands. 

For deal teams, conducting due diligence virtually on physical assets through immersive VR tours can reduce the need for physical presence. And when teams are on-site, AR technology can overlay additional information to facilitate better inspections and analysis.

In managing investor relationships, there are practical applications of AR/VR that can be used to enhance investor experiences and enable interactive information sharing. This could include investor onboarding and regular meetings, providing a more engaging experience for remote participants. In private equity, these applications could similarly enhance onboarding and the frequent meetings between sponsor teams and PortCo leaders. These experiences are being embraced by innovative investors—and will be met with healthy skepticism by some until the accuracy of their outcomes can be validated.

4. Understanding human behavior

People’s state of mind, like if they’re feeling ambitious or tired, can affect how they approach a task. But while humans tend to be good at understanding these states of mind, robots haven’t been. 

Efforts are underway to develop technologies that can understand human behavior and intentions in new and deeper ways. This includes wearable devices that track cognition, as well as neurotech—technology that communicates directly with our brain or nervous system. 

Neurotechnology offers new investment opportunities in companies developing innovative solutions for neurological disorders, brain-computer interfaces, cognitive enhancement technologies and other related fields. Private equity firms view neurotechnology as an emerging investment space, with capital invested up 3.5x in the past four quarters.¹

While being pioneered in healthcare, possible PortCo applications reach far beyond. Think about improved customer experiences, like tailored workout or streaming suggestions based on a consumer’s state of mind. Or the ability to track employee fatigue and stress in real time, to help improve safety, well-being and team performance. As neurotechnology continues to stretch the limits of what’s possible at a fast clip, it’s important to keep an eye on developments and potential applications. 

Value across the deal lifecycle

These technologies are revolutionary for alternative asset management companies and portfolio companies across industries. Their touch will be felt early in the deal lifecycle, and will help accelerate innovation while ultimately reducing total cost of ownership. They promise to endow their human users with new levels of insight and productivity.

Like with digital in the last decade, those who embrace these technological advancements with purpose can create an unassailable advantage in the coming years.

Technology Vision 2024

Source:

¹ Accenture analysis of PitchBook data, retrieved June 18, 2024.