Jamil Jiva, Global Head of Asset Management, Linedata
Change in the asset management industry has always been driven by evolving client expectations and market demands, but innovations in technology have given it the fuel to realise a decade’s worth of change in a tenth of the time. Emerging technologies have redefined how firms operate, with artificial intelligence (AI) taking centre stage. What was once an industry reliant on manual processes and static reporting has transformed into one driven by real-time data, predictive analytics, and integrated systems. AI has shifted from novelty to foundational technology, underpinning everything from investment decisions to compliance management.
But AI isn’t alone in driving this change. The increasing adoption of public cloud infrastructure has provided the scalability and agility required to deploy these advanced solutions, while distributed ledger technology (DLT) offers new avenues for transparency and efficiency in investment operations. Together, these trends are setting the stage for an industry that is not only more dynamic but also better equipped to navigate the complexities of modern markets in 2025.
Global AI regulation and its ripple effects
The course of the industry will also be set by the regulations instituted by governments to manage perceived risks. The implementation of the EU AI Act in 2024 has set a new standard for regulating high-risk AI applications. This legislation was implemented to ensure transparency, accountability, and safety in the deployment of artificial intelligence across industries. For asset managers, the Act demanded a re-evaluation of AI systems used in portfolio management, compliance, and risk assessment. Firms are now required to prove that their AI models are not only effective but also explainable and free from bias.
While the act is focused on the EU, its implications are global. Other jurisdictions are observing its implementation closely, and many are considering adopting similar regulatory frameworks. This regulatory momentum is reshaping how firms integrate AI into their operations, encouraging a shift toward robust governance structures. In 2025, compliance with these evolving regulations will no longer be optional but a foundational requirement for maintaining market credibility and client trust.
Explainable AI: building confidence in decision-making
With compliance at front of mind for asset management CIOs, AI explainability (XAI) will become step zero for clients and vendors alike. Unlike traditional AI models, which often operate as opaque “black boxes” that act on inaccessible information, XAI can provide clear, comprehensible justifications for its decisions. This capability is critical in areas like ESG investing. With customers looking away from pledges and towards action, explainability has never been more important.
A growing focus on XAI shows an industry alignment with the mandates of the EU AI act, but beyond regulatory needs, XAI elevates trust as a currency next to money for investors wanting to understand how AI-driven decisions are made.
For asset managers, adopting XAI is not just about meeting compliance standards; it’s about positioning themselves as leaders in responsible innovation. Firms that integrate XAI effectively are poised to strengthen relationships with their stakeholders while setting new industry benchmarks.
Shifting investment strategies: private markets and beyond
AI is transforming investment decisions, particularly in private markets and esoteric securities, and this will intensify in 2025. Traditional equity markets have faced stagnation, prompting asset managers to explore alternative investment opportunities. Private markets, with their unique complexities and fragmented data, present both a challenge and an opportunity. AI excels in navigating these complexities, processing vast amounts of unstructured data to uncover actionable insights.
The integration of distributed ledger technology (DLT) further amplifies these capabilities. DLT, often associated with blockchain, will allow real-time settlement and enhance data transparency, making it the go-to tool for managing tokenized assets. Combined with AI’s analytical prowess, these technologies enable context-driven investment strategies that were previously unattainable. For example, AI can identify hidden patterns in collateralized loan obligations or catastrophe bonds, unlocking new avenues for sustainable and profitable investments.
The Road Ahead: A Year of Transformation
As we move into 2025, the asset management industry stands at a pivotal moment. The convergence of AI, public cloud infrastructure, and regulatory frameworks like the EU AI Act is reshaping the industry’s operational and strategic landscape. Firms that embrace these changes will not only navigate compliance challenges but also unlock new growth opportunities.
The year ahead will be defined by the balance between innovation and responsibility. AI will continue to lead the charge, enabling firms to make smarter, faster decisions while maintaining the transparency and accountability demanded by regulators and investors alike. Asset managers who integrate explainable AI, leverage the scalability of public cloud platforms, and adopt technologies like DLT will be at the forefront of this transformation. As these trends unfold, 2025 promises to be a landmark year—one that redefines the future of asset management with a focus on sustainable growth, enhanced trust, and enduring innovation.
