Over the last few years there has been a significant shift in the way asset managers and the buy side industry operate. While disruption rarely happens overnight, there has been a surge of new factors which can help businesses to achieve a competitive advantage and the ability to scale global business operations effectively.
Among these factors are new technologies, such as blockchain and artificial intelligence, and technology that helps to remain compliant with an increasing amount of regulatory changes. Both can streamline the operations of asset managers, enable faster processing, and provide users with a real-time view of all activities.
In this article, Bobsguide speaks with Andrea Beste, sales director at Patronas, on some of the biggest challenges faced by traditional asset managers and how utilising data insights and personalisation is imperative for business success and product development.
What are some of the biggest challenges faced by asset managers when it comes to front-to-back investment solutions?
Choosing between a ‘single provider’ or ‘best of breed’ solution is often the biggest challenge and the most difficult decision, Beste says. A ‘single provider’ solution offers the benefit of covering all areas – front-to-back – via one single software, provided by one single counterparty. A ‘best of breed’ solution would require an asset manager to deal with and evaluate different providers, contractual documentation, and – most importantly – different software components.
“In the case of a best-of-breed solution, the key aspects to be considered are how different software components can best be integrated, in order to achieve the most seamless exchange of information and to ensure that there is – as much as possible – a common understanding and a standardisation between the different frameworks. Another big challenge is the question around data requirements,” Beste says.
She adds that all data requirements should be carefully evaluated to understand what information is required by which part of the chain, and how the required data format can be secured. “Import and export of master, static and market data as well as central data warehousing are important aspects to be considered,” she says
Modern technology has allowed front-to-back management systems to become a more common option for the buy-side. What are some of the advantages?
Beste notes that most of today’s software vendors provide the possibility to interface with third party solutions via an API or alternative import and export mechanisms. Independent of whether an asset manager opts for a single software front-to-back solution or a best-of-breed solution, both offer clear advantages for the buy side, Beste says.
The advantages are significant and include factors such as faster processing by eliminating breaks in the data flow, as well as enabling users to have a real time view of all activities to react much quicker to any possible emergencies.
Mistakes are also less common due to the data and process standardisation. “Through the elimination of manual intervention between different steps of processing, costly mistakes can be avoided in many cases,” Beste says. “Employees can concentrate on the important tasks rather than wasting time by manually dealing with standard procedures.”
“There are clear benefits in opting for a front-to-back management solution. The high degree of automation which reduces the need for human intervention considerably saves cost with regard to resources as well as generally saving processing time,” she adds. “This, in turn, improves customer service and satisfaction.”
How important is utilising data insights and personalisation for organisations to succeed?
According to Beste, one of the major challenges associated with product development is achieving a high level of standardisation while at the same time being able to adapt to changing market requirements and to offer clients individual scalability and process reliability.
Using tools enabling efficient data analysis will allow for more qualified decision making, followed by respective product development and process adaptation. This will become increasingly important in the coming years, Beste says, and will be an important factor for businesses looking for ways to differentiate themselves from their competitors.
“Data insight and integrated analysis in real-time will enable users to make the correct decisions,” she explains. “Modern software can deal with a universe of data and analyse this data within a fraction of time – and the more one can take advantage of the results, the better the software can be adapted and personalised to the exact requirements of the users.
As asset managers rely heavily on technical solutions to deal with the complexity of their work, how does a company such as Patronas help businesses build their investment strategies and reach their goals?
Years of experience, Beste says, enable Patronas to fully understand the requirements of its asset management customers and to regularly adapt and develop its software accordingly.
“We put a lot of effort into ensuring that we are in regular contact with our customers and into observing our key markets. We endeavor to constantly be on top of developments when it comes to the need for new asset classes or specific functionality provided by our software,” she says.
Beste explains that Patronas’ flagship product – Patronas Opus – can provide asset managers with an efficient front-to-back solution, which covers all key aspects of asset and portfolio management. In addition, the Opus API allows customers to integrate with any additional inhouse or third-party solution to cover any remaining specific requirements.
“It is a powerful and modular platform which allows for full personalisation via microservice concepts,” Beste says. “One of the main competitive features is its fully integrated and real time compliance rules engine. This engine ensures that all decisions regarding the modification of the portfolio structure are in line with regulatory and fund specific requirements.”
Beste also highlights the importance of reliability for every business, and why every technical solution must be stable and user friendly. “Patronas sees it as a top priority to be close to its customers and to the market and to considerably invest in ongoing product development and high quality customer service,” she says.
It is an imperative the asset management industry accelerates its digitisation efforts, but implementing new technology is always a challenge. What are the most cited concerns among asset managers about implementing new technologies?
Many asset managers, especially those in small to medium sized firms, currently do not use any automated solution, according to Beste.
“For these firms, it is obviously a question of initial investment and related risk,” she says. “There is growing pressure for implementing automated and therefore more regulatory-conform solutions and most asset managers are therefore required to start having a close look at what solutions are available on the market.”
Beste notes that there are several criteria asset managers should consider when selecting a solution, cost being an important one; not only in relation to the software license fees, but also to the requirements regarding hardware, software, and IT resources in general, as well as losses related to a possible disruption of existing procedures.
“However, in many cases we feel most of our customers see technology and automation as a chance for themselves to improve their processes, avoid manual tasks and intervention and to overall increase profitability for themselves and their customers,” Beste says.
She adds that the great majority of Patronas customers benefit from a full hosting and management offering, which has in many cases reduced their concerns about risks associated with a new solution. “Our customers profit from our high quality support and our long experience with automation and software development, and we will be more than happy to assist many more asset managers in their efforts to implement solutions for improved automated processing and asset management,” Beste says.