Excel Vortex: When Asset Managers Should Break Their Spreadsheet Dependency

Only 48% of institutional investors report that they do not rely on Excel for key data and calculations; the majority still depend on spreadsheets for critical financial functions.ⁱ A May 2025 summary of KPMG survey data notes that more than 30% of fund managers and administrators depend on Excel for critical portfolio management functions.ⁱⁱ

Spreadsheet dependency in asset management is well documented and persistent, yet overreliance on Excel in critical workflows creates operational, governance, and scalability risks that compound as firms grow.

Operational risk of a spreadsheet operating model

McKinsey reported that a top 10 asset manager estimated that automating query management and manual workflows could save 100,000 hours annuallyⁱⁱⁱ — the equivalent of 2,500 40-hour work weeks. The scale becomes clear when you walk through a single department: a treasury team managing liquidity exposure, trade settlements, and P&L calculations in Excel.

Let’s say a treasury analyst is managing daily cash balances across their banks in a spreadsheet using complex macros that link datasets behind the scenes. This workflow carries operational risk, in the case of fat-finger mistakes, a compromised formula, key-man risk, or the dreaded cascading errors issue. A 2024 academic study revealed that 94% of spreadsheets used in business decision-making contain errors.^iv Plus, it’s incredibly hard to locate a spreadsheet error once you’re aware of it.

The creator of that daily bank cash balances spreadsheet has in effect coded their own software program. That creator, and the firm, are therefore living and dying by the sheet. If that analyst is unable to work on the cash balances on a single day, it could be a problem for the trading desk. And of course, when that spreadsheet owner leaves the firm, key-man risk kicks in, because it’s impossible for anyone but the creator to understand the workflow.

Your layered workbooks create ROI leakage

The first step is to identify the biggest efficiency leaks in the operational plumbing. These compound when a single workbook layers reconciliations, cash management, trade settlements, forecasting, and portfolio management, each a distinct workflow with its own error surface.

• Treasury and cash management: Managing literal cash balances and liquidity exposure.
• Reconciliations: Ticking and tying data, often from vendor-provided Excel files.
• Trade settlements and P&L: Calculating profit and loss and managing the settlement of trades.
• Forecasting and budgeting: Layering predictions and investment plans over existing cash data.
• Portfolio management: Using Excel as a primary tool for decision-making regarding holdings.

Lack of data access leaks ROI

Then there are the drawbacks of keeping a firm’s data segregated in silos of spreadsheets. Only 18% of front-office teams at institutional investors can get timely access to data without manual intervention from other departments.^v Portfolio managers need instant visibility into positions, exposures, and valuations, not a manual hunt across departmental spreadsheets. Ideally, the risk analyst is pulling their value-at-risk metric from the same reference and security data that the accounting manager uses to pull internal rate of return numbers, and ideally, they can pull it up instantly.

Aside from the time and labor savings of investment operations automation, there is also the newfound ability to scale the business.

Why scaling becomes difficult in spreadsheet-driven firms

Excel becomes a speed brake as a firm scales. Explosive growth makes that visible fast. Hiring more people is one response. Another is investing in modern data and operational platforms.

Some rapidly growing firms are busting at the seams, data-wise. They have layered workbooks upon workbooks with each new currency, fund, or geography, and the shelf is buckling under their weight. If adding an entity or trading a new line of business takes days or weeks, then it might be time to break the dependency. Or worse, if it becomes prohibitively onerous to add foreign currencies or certain portfolio managers to the spreadsheet, it’s definitely time to pursue centralized data infrastructure and workflow automation.

Data workflow automation prevents growing pains

Escaping the vortex of Excel dependency is not a simple or cheap endeavor. However, the operational headroom it creates makes the effort worthwhile. The front office of an institutional asset owner is happy to increase hedge fund investments to drive outperforming returns. But the middle and back-office spreadsheet jockeys will be laboring because each hedge fund manager operates differently, with unique reporting formats, frequencies, and systems. Asset managers are happy to expand into private credit, but the middle- and back-office must ingest loan tapes. For certain specialty finance structures, that means spreadsheets with dozens of columns and hundreds of thousands of rows of unstructured loan-level data. Automated tape management captures every event and validates and reconciles them against forecasts and accounting systems in a fraction of the time.

Speeding to AUM growth without friction

Even the big global asset managers discover frictions in scaling. They might have a footprint in various geographies already, but if they see an opportunity to enter a new credit or currency market overseas, the data and operations side is no flip of a switch. But a firm or institutional investor that’s already done the migration work is ready to move when the opportunity comes. Speed to market is what separates a firm that captures it from one that watches it close. Managers want to begin generating returns as soon as possible for their new private-credit vertical, multi-strategy hedge fund, or dedicated FX fund. And they want to jump on opportunities where time is of the essence.   

Once a firm has done the upfront work of adopting an investment-native data platform, it will be able to scale with fewer limits. If you start trading in Japanese yen, for example, you won’t need a person to go in and update workbook formulas or macros, which always come with a risk of error. Instead, shared data models and built-in API capability will automatically add the necessary currency attributes, market conventions, pricing feeds, and downstream calculations across the platform.

Breaking the cycle of Excel dependence

No one on the middle-office team wants to be the bottleneck, even when it’s the tools, not the people, that are slowing things down. We’re working to help firms break the cycle of Excel dependence so they can open the door for automating portfolio operations, investment operations, and fund reporting.

You’ll know it’s time to step away from Excel when flexibility disappears, onboarding new counterparties stalls, or adding a single entity breaks the existing model. For many, AI will force that reckoning, as the automation it enables makes manual workflows visibly obsolete. Executives at State Street Alpha warn that, “Outdated databases, spreadsheets, and isolated data stores are significant barriers to harnessing AI’s advantages.”^vi

The goal is to find the ideal operating model that suits your team today and positions you for future opportunities as you grow in complexity, assets, and investor base. Every firm has a moment when the cost of staying on spreadsheets outweighs the cost of leaving them. The firms that act now won’t be scrambling later.