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Fund Administrators: Are You Liberating ‘Data’ for ‘Insights’ to your clients?

PROBLEM

Increased competition, fee compression and margin pressures in the fund administration business have turned the focus on increasing operational ‘alpha’ (optimize operational workflows) and providing additional value-added services (new revenue sources)

Modernizing the technology stack, move to ‘pay-per-use’ business model (i.e. use of ‘cloud’), enabling exception based workflows are some areas focused on operational ‘alpha’

Additional value-added services include providing custom portfolio analytics and leveraging ‘services’ data to enable portfolio ‘Insights’ for use with Business Intelligence (BI) tools

DATA is the key for getting deep portfolio ‘Insights’ and this service acts as a single source of truth for the client data

Fund admins are therefore positioned perfectly to leverage this DATA asset as a service. Done right, this will be a huge competitive differentiator

Large administrators can afford to provide such an offering at their own pace because of their sheer market power. And some of them are already providing such a service for their clients

For small to mid-size administrators that see ‘DATA’ as a key strength for staying in the admin business, delivering an effective BI solution to their clients can be a key competitive differentiator that can position the firm for the future

One of the key challenges in providing such a service is the integration across multiple systems, including legacy systems

So what can administrators do to get started on ‘liberating’ their data to their clients?

APPROACH

Here are some key steps to consider along this path:

1. Understand source of DATA from various operational systems and build a DATA platform that are separated by ‘domain’ areas 
   – ‘Domain’ modeling is key: Business and technology experts with experience working in ‘investment management’ area is important

2. Interface with existing systems using API technology

3. Leverage ‘cloud’ warehouses such as Snowflake/Redshift for performance and scale and enable users to access the large ‘data’ sets using their preferred BI tools

4. Build or buy new domain modules using modern ‘cloud’ architecture – ‘microservices’

5. Ensure access to above data is also through use of API for clients to consume the same for reporting and to integrate with other systems internally

6. Enable operations workflows that are exception based, i.e. manual intervention only when there are exceptions

7. Think operations from the point of view to deliver new value-added services using ‘Pay-Per-Use’ business model 

RESULT

For Clients: Enable ‘Self-Service’ model, i.e. provide ability to analyze their data to gain deeper understanding of their portfolios – better management of portfolio risk, performance and in development of new custom products

For Fund Admins: More focus on their core ‘service’ business and less on custom reporting/ ad-hoc data needs.

 

 

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