Citi and CREATE-Research Report: Innovation in Asset Management Pivots to ‘Operational Alpha’

Key Terms

assets under management financial

Assets under management (AUM) is the total value of all the investments that a financial company or fund is responsible for overseeing on behalf of its clients. It’s like a big bucket that shows how much money the firm is managing for people or organizations. A higher AUM often indicates a larger, more trusted company, and it can influence how much money they earn and the services they can offer.

operational alpha financial

Operational alpha is the extra profit a company or fund generates by running its business more efficiently than others, through better processes, cost control, or smarter deployment of resources rather than by taking bigger market risks. For investors it signals that management can sustainably boost margins and cash flow—like tuning an engine to get more miles per gallon—so earnings and shareholder value can grow even if overall market conditions stay the same.

digital transformation technical

Digital transformation is the process of using digital technologies to fundamentally change how organizations operate, deliver value, and connect with customers. It often involves updating systems, automating tasks, and improving digital tools to increase efficiency and stay competitive. For investors, it signifies a company's ability to adapt to technological advances, which can impact its growth prospects and long-term success.

digital assets financial

Digital assets are electronic files or representations of value stored electronically, such as cryptocurrencies, digital tokens, or digital art. They matter to investors because they can be bought, sold, and used for transactions much like physical assets, but exist entirely in digital form, offering new opportunities for investment and financial innovation.

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Key Highlights:

• A new Citi and CREATE-Research report reveals a strategic pivot in asset management innovation, with firms now prioritizing operational excellence and process transformation
• This shift to ‘operational alpha’ aspires to improve client responsiveness and productivity, with partnerships emerging as a core capability to accelerate innovation
• While full digital transformation will evolve gradually, key trends like mutual fund to ETF conversions are gaining traction. Citi’s Services business is investing over US$2 billion annually to modernize its solutions and empower clients

LONDON--(BUSINESS WIRE)-- Citi Investor Services and CREATE-Research today released its latest report “Upping the Innovation Game in the Asset Management Industry”, highlighting how firms are prioritizing operational excellence, process transformation and partnerships as the next frontier of innovation in asset management. The report findings were drawn from a survey of 221 asset managers across 26 countries managing a total of US$34.8 trillion in Assets under Management. Respondents were polled from February to May 2026.

In addition to 40 interviews with senior executives from a cross-section of survey respondents, the report highlights a shift from product innovation to process and organizational driven innovation, as firms seek to deliver operational alpha by turning their infrastructure into a competitive edge to improve investor outcomes.

Primary findings:

• The scope of innovation is changing: While innovation remains crucial with 59% viewing it as an overall priority, the scope is moving beyond new products to operational process and organizational transformation as firms respond to fee pressure and rising complexity post the 2008 Global Financial Crisis. 62% cited process innovation as a priority, followed by 41% for organizational innovation and 28% for product innovation. The scope of innovation has expanded to operational excellence for improved costs, quality and credibility.
• Innovations are targeting multiple goals: Innovation efforts now serve multiple purposes, with 83% citing being more responsive to client needs as a key goal. This includes meeting clients’ return expectations and risk appetites within cost-effective fee structures. 74% reported improving productivity across the value chain as a main goal, while 64% believe in enhancing operating leverage to improve scale.
• Mutual funds to ETF conversions are gaining client traction: 57% cite the conversion of mutual funds into ETFs as delivering the most client value, underscoring the role of ETFs as an efficient ownership structure for on-exchange assets and a leading investment vehicle in innovation.
• The digital future will evolve gradually: Despite progress in AI and automation, digital transformation remains a long-term journey, with 57% expecting it to take more than five years as asset managers progress towards a digital future. Challenges include data reliability and explainability issues arising from self-learning systems. Asset managers are taking a measured, “learning by doing” approach in driving the current rate of adoption.
• Partnership at scale is becoming a strategic core capability: Outsourcing is now evolving into partnerships at scale, with 44% viewing collaboration with third parties as a means to build scale, enhance capabilities, and share risk by combining unique capabilities. Asset managers also view partnerships as an enabler to accelerate innovation and achieve operational alpha.

Chris Cox, Global Head of Investor Services at Citi, commented: “The report highlights that asset managers are increasingly looking to form partnerships not just for efficiency, but as a strategy to accelerate innovation and enhance client outcomes. At Citi, driving innovation to deliver client solutions is integral to our growth agenda. Clients deserve true transparency and instant market information to deliver the services their clients will expect. Services continues to invest over US$2 billion annually in platform modernization delivering uniquely integrated securities and cash solutions in real-time. Digital assets will be integrated into the same rails. We are committed to empowering our asset manager clients to build scale, enhance their capabilities and accelerate their innovation agendas.”

Amin Rajan, CEO of CREATE-Research and the lead author, commented: “Innovation has been a key instrument for asset managers of all sizes and hues to help them remain relevant in a landscape where competition has turned from benign to malign.”

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 180 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.

Additional information may be found at www.citigroup.com | X: @Citi | LinkedIn: www.linkedin.com/company/citi | YouTube: www.youtube.com/citi | Facebook: www.facebook.com/citi

View source version on businesswire.com: https://www.businesswire.com/news/home/20260618838500/en/

Media Contacts:
Harsha Jethnani harsha.jethnani@citi.com

Ai Li She ai.li.she@citi.com

Source: Citi