• Sai Perry, Head of Solutions at Clearwater Analytics


• 22.12.2021 02:30 pm
#Investment #ESG

2021 was dominated by unpredictability and market volatility, and from our insights and data it is clear that 2022 is set to follow suit. This year we have already seen strong themes such as the Great Resignation, ESG investing and the digitalisation of financial services. With the pandemic having a significant effect on investments over the past year, the aftermath is only just beginning. 

Here are the top four predictions that Clearwater Analytics believes will be impacting the investment, insurance, asset management and accounting industry in 2022. 

Inflation and surging interest rates

Towards the end of this year, there has been the increasing concern that the fluctuations in inflation will result in the surge of interest rates. The past few years have displayed an unprecedented stability in the market, with only minor variations in both inflation and interest rates. Next year, interest rates have been forecasted to rise suddenly, with the Bank of England already voting to return interest rates to pre-Covid levels. As this comes into force, the resultant changes could force investors and asset managers to react swiftly. Reactions like this require insurers to have an elevated level of understanding of their portfolios and most companies have already started to prepare. For this reason, risk management will become increasingly important and as interest rates rise, managers will be driven to mitigate their risk by adopting software that allows them to analyse portfolios and react in real time.

The Great Resignation

Alongside changes to inflation, it is no secret that there has been a huge surge in the number of resignations. Increased workloads and burnout being cited as key factors, alongside the ‘post-pandemic’ reprioritisation of employees. With a fluctuating workforce, investors are being force even further towards investment reporting technology, to maintain their ability to analyse their portfolios and remove tedious manual procedures. In turn, freeing up the workforce to focus on more complex and revenue driving tasks and reduce turnover rates. 

Corporate Real Estate suffers at the hands of Digitalisation

The pandemic caused a huge global shift towards the digitalisation of goods and services. This led to industries such as corporate real estate and retail taking a massive hit this year, with shoppers and corporate workers staying at home rather than utilising shops and office spaces. The industry’s volatility, demonstrated by Evergrande, means that retailers either no longer need a physical space or cannot afford to use it. This shift is a forewarning to the corporate retail industry’s inevitable collapse. Although the effects of this have been delayed due to a series of government intervention and structural factors, such as long lease lengths, these inhibitors will only be present for so long before the bubble pops. Only time will tell, but investors and asset managers need to be prepared ensure their survival. 

ESG Standards and Ratings

The latest EU ESG Directive and COP26 are starting to streamline changes across a breadth of industries. As a result, ESG and sustainability are becoming more important in our day-to-day lives. But for investors this is presenting a problem., as they combat a lack of accuracy and transparency when reporting ESG assets and standards. With no current ratings and standards set by an external body, competitors reporting will not match up, leaving the data obsolete and useless. Although we hope to see more universal standards and ratings imposed on the industry, there is still a lack of transparency within the data due to a lack of data in present times. This means investors will lean more towards investment analytic and reporting software to improve the information and accuracy surrounding their decisions.