From legacy to leadership – the role of data in European asset management 

The European asset management industry faces fee compression, rising regulatory scrutiny, and increasingly sophisticated client expectations. At the heart of its transformation lies a powerful force: data. Alongside it, digital technologies are reshaping how investment firms operate, serve clients, and compete. What began as a reactive effort to comply with new rules has evolved into a strategic push toward digital maturity. As the industry adapts, data and digitalization are the way forward. 

European fund managers oversee more than €23,200 billion in assets,¹ a significant portion of global investable capital, and the industry is being reshaped by three structural forces: 

1. Regulatory pressure, especially from regulation like DORA, MiFID II, SFDR, and the EU AI Act. 
2. Changing investor behavior, demanding more transparency, personalization, and digital access. 
3. Competitive disruption, particularly from fintech-enabled platforms. 

In this environment, data is both the problem and the solution. Firms are drowning in it, yet many still struggle to convert it into actionable insight. Digitalization, meanwhile, promises to turn fragmented infrastructure into agile, scalable ecosystems, but only if executed with vision and discipline. 

The strategic role of data 

Where once data was used primarily for compliance and reporting, it is now a critical lever for performance. Three data-driven opportunities stand out: 

• Performance insights: Advanced analytics can help identify return drivers, uncover hidden risks, and fine-tune strategies across asset classes. 
• Client experience: Firms with clean, integrated datasets can tailor communications, portfolio construction, and service delivery. 
• Operational efficiency: Streamlining back middle- and back-office functions through automation reduces manual errors and cutting processing times. 

Yet, few European firms have achieved full data maturity. Legacy systems, manual processes, and inconsistent data governance remain widespread. Bridging this gap is critical. Asset managers cite several challenges. 

• Poor data quality and data culture: EY surveyed data-related senior executives across wealth and asset management firms. While 74% said their data was improving, 79% and 45% felt that poor data quality and an immature data culture respectively were pain points.²  
• Data silos and data strategy: As per Broadridge,³ 47% of asset managers experience data silos, and only 58% have a clear data strategy enabling them to maximize return on investment.
• Data integration and visibility: Difficulties in connecting data sources and understanding data end-to-end are obstacles – 37% of asset managers identified integration of data sources and increasing visibility end-to-end as a top three priority over the next one to two years.⁴ 
• Lack of talent: Asset managers (53%) and asset owners (28%) see recruiting and retaining skilled staff as necessities to drive digital transformation.⁵

Digitalization in practice requires a deep cultural change 

True digitalization is not about adding new tools to old workflows. It requires rethinking how the business operates, often from the ground up. Digital-native firms – whether fintech startups or new entrants from other sectors – are building these capabilities from day one. Legacy asset managers must retrofit while running their existing operations. This dual challenge requires not just technology investment, but deep cultural change.

Several technologies are reshaping the asset management value chain: 

• Cloud-based infrastructure: Enables scalable data storage, access, and processing, while reducing costs and enabling remote collaboration. 
• AI and machine learning: Support predictive analytics, fraud detection, decision-making, etc. According to EY research, the majority (90%) of European financial services firms have adopted AI into their operations to a certain extent. 
• Automation: Streamlines compliance reporting, onboarding, and document processing, reducing friction and cost.  
• Client-facing platforms: Offer real-time performance tracking, self-service options, and secure digital communication – essential for the next generation of investors. 

Yet, many firms struggle to prioritize change because it challenges long-standing hierarchies, habits, and workflows. To illustrate, portfolio managers may be reluctant to trust machine-led insights, IT departments may lack alignment with business goals, and leadership may underestimate the resources needed for cross-functional transformation (e.g., only 33% of Luxembourg asset servicers have full funding for digital initiatives).⁶ Unlike implementing a new CRM or compliance tool, true digital transformation touches every corner of the organization, and demands a mindset of agility, experimentation, and continuous learning that does not come naturally to firms built around control, precision, and risk aversion.

The role of regulation: friction or catalyst? 

European regulation has often been viewed as a burden, but it’s increasingly becoming a catalyst for digital progress. Take DORA (Digital Operational Resilience Act): it doesn’t just require firms to secure IT systems, it encourages a broader shift toward integrated, stress-tested digital operations. This is forcing organizations to reconsider how they manage third-party providers, internal systems, and incident response protocols. Likewise, MiFID II has elevated the importance of transparency, cost breakdowns, and record-keeping, driving the need for better data lineage and automated reporting systems. Meanwhile, the EU Artificial Intelligence Act sets new obligations for high-risk AI systems, affecting everything from client onboarding to portfolio management tools. Additionally, the Corporate Sustainability Reporting Directive (CSRD) demands digital transformation of ESG data collection, assurance, and reporting processes. 

The road ahead: what will define digital winners? 

In the coming years, digital maturity will be a  dividing line. Success will depend on: 

• Data mastery: Firms that can unify, cleanse, and govern data effectively will unlock smarter investment decisions and smoother client experiences. 
• Tech-enabled agility: The ability to scale services, launch new offerings, and adapt to regulatory changes rapidly will be a key advantage. 
• Cross-functional talent: Digital transformation is not just an IT project. It requires investment professionals, compliance officers, and client teams to speak a shared digital language. 

Fortunately, since 2024, Luxembourg offers an 18% tax credit for digital investments, covering capex and opex for digital transformation. This includes hardware, software, cybersecurity, automation, and digital enhancements. Firms should absolutely take advantage of this incentive to upgrade legacy systems. 

The digitalization of European asset management is well underway. Success lies in embedding data and digital thinking into the DNA of the organization – aligning it with compliance, strategy, and client outcomes. For firms that get it right, data and digital transformation will take them from legacy to leadership.  

How EY can help 

EY Luxembourg provides specialized services to the entire WAM ecosystem: asset servicers, PSFs, third-party management companies, and alternative investment fund managers. Our team aims to add long-term value by finding innovative ways to create a more digital and agile business model. Some of our services include: 

Digital strategy: We support clients in ensuring their digital maturity aligns with their strategic objectives. 

Digital client experience: We support all aspects of transforming the client experience, including sales, onboarding, and other interactions. 

Digital operations: We help clients digitalize manual processes and connect siloed systems, so as to better manage client experiences, from onboarding, operationalizing, and invoicing, to customer servicing. 

Application modernization: We help asset servicers modernize their on-premise legacy systems which require high maintenance, and which prevent technical scalability. 

Regulatory compliance: We help firms digitally track regulatory changes, stay updated on new developments, navigate multi-jurisdictional rules, and make data-driven compliance decisions.