SWFs, Pensions Double Down on Tech

Sovereign wealth funds (SWFs) and public pensions are seeking to improve their data and technology capabilities, according to a report by State Street.

Currently, just over half of these institutions believe they effectively use technology to support investment operations, the survey of 25 SWFs and 25 government pension funds found.

Additionally, 36% said they have trouble integrating data with their existing operational systems.

SWFs were slightly more confident about their technological capabilities, with 60% saying they use technology effectively, compared to 44% of public pensions.

To bridge the technology gap, 78% of SWFs and pensions said they plan to hire or train employees to develop more advanced in-house capabilities. Nearly two-thirds said they are looking to develop talent in technology, with the same proportion planning to build talent in the area of data management and analytics.

“The leaders are investing in their IT capabilities and developing sophisticated analytical applications to facilitate their digital and IT capabilities,” said Jan Muysken, global head of sovereign wealth and investment funds at PricewaterhouseCoopers.

SWFs in particular are investing in technology through human capital, with 76% planning to hire and develop talent in data management and 72% in technology.

Pensions, meanwhile, are having to focus more of their talent development efforts on risk and compliance, due to facing greater regulatory concerns.

But both SWFs and pensions said they will focus on strengthening cybersecurity measures over the next year, with 84% of pensions and 72% of SWFs citing it as an area in need of improvement.

Other technology priorities included data warehousing capabilities, advanced scenario modeling, and engaging third-party providers.

Related: Investing Is One Big Data Problem