Amid growing assets and revenues, margins squeeze and climbing operational costs, infrastructure providers expect to gain ground, whereas ManCos and AIFMs focus on in-house automation, technology and AI adoption.
Is infrastructure reshaping the economics and competitive dynamics of asset management? AIFMs and ManCos are operating in an environment of increasing structural pressure: “Regulatory expectations continue to intensify, particularly around delegation oversight, valuation, risk management and transparency, requiring more robust governance, documentation and monitoring capabilities,” EY sees.
Profitability paradox
“Assets and revenues keep growing, while margins squeeze and infrastructure bills climb, ” a recent survey by PwC explains: “Profit per AuM has fallen 19% since 2018 and is projected to decline by a further 9.1% by 2030”.
“Despite this contraction in the number of vehicles, assets under management increased significantly, rising by approximately €102bn in Q2 2026 to €6,424bn in AuM with 288 active authorised entities,” EY confirms.
Paradoxically, PwC notes that “29% of asset managers spend more than 70% of their technology budget maintaining legacy systems, while 58% of asset managers rank market data among the most strategically expensive infrastructure layers relative to the value it delivers”, followed by regulatory and reporting systems, and core technology platforms.
Amid persistent margin pressure, many traditional operating models, still reliant on fragmented data, manual processes and legacy systems, are struggling to keep pace and deliver more with constrained resources.
Consequently, “the combination of rising assets, stable licensing activity and expanding branch networks suggests that scale, cross-border reach and operating model flexibility are becoming increasingly important differentiators for ManCos,” comments Pierre-Marie Bochereau of EY Luxembourg. “In practice, this may translate into further consolidation, increased outsourcing, and a continued focus on scalable platforms”.
Infrastructure becomes strategic
Asset managers expect faster responsiveness, real-time insights and greater service quality. As a result, “infrastructure has quietly become one of the most consequential strategic decisions an asset manager makes,” Peter Pollini of PwC US says.
In this context, 70% of infrastructure providers expect to gain ground and to win “a larger revenue-pool share within five years,” Björn Ebert of PwC Luxembourg adds. “Some 35% are evolving into platform or ecosystem partners for asset managers that build capabilities in-house, while 23% are co-developing proprietary infrastructure with selected asset manager clients,” PwC survey finds.
However, outsourcing is not necessarily on ManCos’ radars, a survey by KPMG finds. “Participants increasingly identify technology, AI, Group synergies and product innovation as the most effective ways to support future growth, while traditional outsourcing models are becoming less prominent,” the report explains.
Intelligent scaling
“Today, leading organisations are focused on intelligent scaling – not just to grow faster, but smarter,” adds Alan Picone of KPMG Luxembourg. “We see this shift reflected in Luxembourg’s continued evolution as a European business management hub, with local platforms delivering increasingly sophisticated ancillary services beyond their traditional regulatory mandates. Success will increasingly depend on the ability to turn ambition into disciplined execution and deliver impact at scale”.
Automation and technology, Group synergies and AI adoption are the three top scalability drivers identified by ManCos and AIFMs; Outsourcing ranks in sixth position.
“The challenge facing organisations is no longer growth itself, but how to achieve growth without increasing operational complexity,” KPMG Luxembourg continues. “Product innovation is also emerging as an important growth lever, with respondents increasingly exploring new fund structures and product formats such as evergreen funds and tokenisation initiatives”.
Furthermore, AI is emerging as a transformative force: “AI could reshape the economics of the asset management industry,” McKinsey writes. “With the advent of agentic AI, there is a once-in-a-generation opportunity for asset managers to recover and leapfrog profitability levels with the potential impact of AI.”
An average asset manager – such as a mid-sized manager with $500 billion in AuM – “could capture 25 to 40 percent of total cost base in efficiencies through AI opportunities enabled by end-to-end workflow reimagination,” the document explains.
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