Beancounters at Clearwater Analytics have added up some numbers and reckon a strange investment paradox is forming inside the asset management industry’s AI scramble.
AI budgets across fund management are rising at a cracking pace, with 63 per cent of firms lifting spending by more than 50 per cent in the past 12 months. Not one firm admitted to cutting its AI budget.
Yet the industry cannot decide whether it is spending enough or already chucking money into the furnace.
A quarter of fund managers think their organisation is still being too tight with AI investment. At the same time, 66 per cent fear their firms are already spending too much.
That leaves the industry with a fairly awkward fault line. Everyone seems convinced AI matters, but nobody appears sure what sensible commitment looks like when actual capital is on the table.
Clearwater’s research suggests asset management is more mature in AI than the usual “late to the party” story allows.
Some 56 per cent of fund managers began integrating AI four to five years ago. Another 34 per cent started two to three years ago, while just nine per cent began within the past year.
So the sector is already knee-deep in its AI journey. The problem now is scaling the stuff, governing it properly and working out whether the spending delivers measurable returns.
The spending surge is still bonkers.
Some 13 per cent of fund managers said AI investment rose by more than 100 per cent in the past 12 months. Another 50 per cent saw spending climb between 50 and 99 per cent.
Only four per cent kept budgets flat. Nobody reported a cut.
Competitive pressure, client demand and the growing view of AI as operational plumbing are all pushing the industry in the same direction.
AI has moved beyond pilot schemes and PowerPoint theatre. It is already sitting in fund management’s engine room, shaping investment decisions, risk management and daily workflows.
Clearwater found that 43 per cent of managers now use AI for 25 to 49 per cent of their investment decision-making. Another 10 per cent rely on it for most of their investment calls.
In risk management, 38 per cent apply AI to 25 to 49 per cent of their processes. Eight per cent use it for most risk assessments.
Operations are getting the same treatment, with 34 per cent integrating AI into 25 to 49 per cent of operational decisions. Six per cent use AI for more than half of their operational workflows.
The problem is no longer whether to spend on AI. It is how to turn that spending into something less embarrassing than another costly technology fashion show.
That means data infrastructure, governance, talent and operating processes that can make AI useful rather than just expensive.
Clearwater Analytics CTO Souvik Das said: “What our research reveals is an industry wrestling with how to get AI right. Increasing the budget is the easy part. The harder challenge is institutionalising AI in a way that drives genuine alpha and operational excellence, rather than simply adding cost and complexity.”
“At Clearwater, we are helping clients navigate exactly this challenge by embedding AI directly into our platform and automating the data reconciliation and investment accounting lifecycles that form the foundation of everything else,” Das said.
“When the infrastructure is right, AI doesn’t just work; it compounds. It identifies data anomalies in real-time, reduces the manual burden on risk and operations teams, and frees people to focus on the high-value strategic work that actually moves the needle,” Das said.
