McKinsey January 21, 2025
Bryan Petzold, Elizabeth Skovira, Frederic Jacques, Marcos Tarnowski, Piyush Sharma, Raj Bector, with Akshat Kumar, Jérémie Guay, and Ragi Ragavan

Strategy, tools, and talent are key considerations for institutional investors as they adopt and scale technology to generate alpha.

It is difficult to talk about investment success without mentioning technology innovation, AI, and generative AI. The investment landscape has fundamentally shifted over the years—but where are the world’s largest investors on this journey?

Many institutional investors, be it pensions, insurers, or sovereign wealth funds around the world, are struggling with how, when, and where to begin their technology transformations (particularly in a budget-conscious context). As a result, they are not only falling perilously behind more forward-leaning investors with whom capital ultimately competes but also failing to capture the full financial benefits of such transformations.

Our analysis suggests that institutional investors’...

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