By Justin Partington, Global Head of Fund and Asset Managers
Digital transformation has been a priority on the agendas of private market CFOs for decades, but the ‘next best thing’ is now in town. While AI is something of a buzzword, the question remains – is it being actively used as much as it’s being talked about? In this article, using insights from our latest CFO survey report, we examine firms’ digital maturity, their data strategies, and whether they have the talent they need to back these up.
AI – the CFO’s new right-hand man?
CFOs are increasingly turning to digital tools to enhance fund performance analysis, streamline compliance processes and deliver more timely reporting to stakeholders. The research revealed that technology is the single largest area for operational investment, with 42% of CFOs surveyed reporting that it’s their biggest investment focus for driving operational excellence.
However, AI is emerging as the next stage in digital transformation, with the potential to help firms reach new levels of operational agility.
According to our survey, 56% of respondents say that AI has already significantly improved their organisation’s operational efficiency. When asked about specific use cases, respondents pointed towards using AI to optimise fund performance analysis (33%); streamline data collection and analysis (29%); improve the client experience (27%); and enhance decision-making via predictive analytics (27%). However, one in five (20%) respondents say they are not currently leveraging AI effectively, suggesting patchy adoption and uneven digital maturity.
There’s an urgent need to build foundational digital infrastructure before layering on advanced tools and, while AI holds huge promise in the private markets space, implementation is still in its infancy. The key is starting with a good, solid data platform, as you can’t expect good outputs without good inputs. Ideally, firms should train a large language model (LLM) on their own data, so it remains secure and doesn’t have to go into the public domain. That requires both engineering capability and people who deeply understand the business.
Tamas Mark, our Global Head of Real Assets, noted in our survey report that “the potential [of AI in the private markets] is extremely high, but take-up is still limited. People get distracted by the noise and hype around AI, but it’s the underlying data that really matters – and ultimately how you use it to forecast performance and steer your business.”
Many are witnessing the talent crunch in this market. As CFOs move from experimentation to execution, many are finding that hiring skilled data teams is one of the biggest barriers to getting AI projects off the ground. “It’s a tough market,” Tamas continued. “Firms either need to invest in talent or find the right outsourced partner who can give them the skills and expertise they need.”
Elise Gray, our Head of CFO Support Services in the U.S, highlighted that the type of AI being used is often misunderstood. “People use generative AI tools like ChatGPT every day, but that’s not always the type of AI we’re talking about when it comes to operations. What we’re really referring to is agentic AI – tools that can replicate human work and execute tasks. Many managers are curious about agentic AI, but it’s still in its early stages. Firms don’t know where to start and it’s surrounded by data security worries.”
Building a solid data strategy
Despite widespread acknowledgement of the value of data, as many as 18% of CFOs surveyed said their organisation doesn’t currently have a clear data strategy. Meanwhile, the biggest barriers to improving firms’ data strategies are the high costs associated with upgrading systems (27%) and talent shortages for skilled employees such as data scientists (22%).
“Having a watertight data strategy is one of the most important operational priorities CFOs should be thinking about right now,” urged Neil Synnott, Regional Chief Commercial Officer, Asia-Pacific. “Data quality is absolutely vital. Bad data in means bad decisions out. Being able to organise and extract insights from your data is where the value is really created – not in the system itself, but in how you use it to run your business.”
Interestingly, once-dominant challenges such as legacy systems (4%) and data siloes (4%) are almost eradicated for private markets CFOs, suggesting that cloud infrastructure and modern data platforms are now becoming the norm.
Neil added, “This is no huge surprise to me. Over the years, the industry has become much more confident in lifting data out of legacy systems and migrating it onto modern platforms. With cloud-based tools, you can interact with and democratise data in a way that simply wasn’t possible before.”
Rewiring private markets for the age of AI
While the digitisation of private markets is inevitable, it’s not uniform. There is strong momentum behind AI as the word of the day, however, it’s critical to get the fundamentals in place before embarking on this digital journey. Talent shortages, cost constraints and incomplete data strategies mean that many CFOs are struggling to get their organisation off the mark on their AI journeys.
As Elise summed it up: “The question CFOs should be asking is not just ‘how do we use AI?’, but ‘what business problem are we solving, and how can we solve it better with data and technology?’. The best answers will come from those who start small, test frequently, and build with intention.”
