Private-Equity Firms Focus on Cybersecurity

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By Clare Dickinson

Private-equity firms are catching up with their financial services peers when it comes to technology, with cybersecurity and the cloud identified as investment priorities for the year ahead, according to an industry survey.

Banks and asset managers have already begun to use artificial intelligence and machine learning in parts of their business; trading units within banks are looking at how to make money from cryptocurrencies; and many financial services institutions have partnered with fintech startups.

But private equity has been slow to embrace these innovations. That seems set to change, according to fund administrator Augentius, which asked buyout and real estate firms about their use of technology.

Ian Kelly, chief executive of Augentius, said: “It’s fair to say the old stereotype of the industry lagging behind when it comes to seeing the importance of technology is now firmly outdated. The results underline how attitudes have shifted.”

More than half of respondents (55%) identified technology as a high priority for internal spending over the next year, with data management and the cloud identified as the top areas for investment followed by cybersecurity. AI and machine learning were cited by 17% of respondents as areas their firm is investing in — the technologies were also identified by half of respondents as having the potential to transform the private equity and real estate industries.

Augentius said: "The past decade has seen the sector make profitable use of the vast array of information now available to it via ever-more-sophisticated analytics. The application of AI is a logical next move. Although there is much still to be developed, firms are already taking tentative, experimental steps, and this could easily emerge as a dominant theme in the near future."

However, there are barriers to adopting new technologies, the biggest being the difficulty of replacing legacy IT systems — cited by 40% of respondents. This is a problem across financial services, with banks investing billions to overhaul old systems.

That was followed by an internal lack of technology leadership, talent and skill (39%) — again, a problem faced by the broader industry as the most talented programmers are often drawn to technology giants such as Google. Institutions in the City of London have been working out how to compete with these companies for skilled workers by using contemporary office design and offering perks such as unlimited annual leave.




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https://www.penews.com/articles/private-equity-firms-focus-on-cybersecurity-20180614

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