Asset Managers Focus on Improving Data Architectures and Using Multiple Service Providers to Transform their Operating Models

A recap of the recent InvestOps Virtual Boardroom 2021 conference, which brought together executives from firms with a wide variety of investment strategies, operating models and assets under management.

A poll of major European asset managers shows there is a focus on outsourcing to specialist providers rather than wholesale systems change — necessitating a strong data architecture coupled with high quality data integration.

Asset managers are investing in smarter data architectures to create a single source of data that allows them to run all aspects of their business. This reflects reduced demand for large scale transformations.

They say they are also more successful in executing their strategic roadmap when their core operations activities are interoperable, enabled by an open-architecture platform and data integration.

These views emerged at the recent InvestOps Virtual Boardroom 2021 conference, which brought together executives from firms with a wide variety of assets under management, partially or fully outsourced service models, and investment strategies.

Despite the array of firms involved, a consistent theme coming out of the event was the use of data to maximize business potential.

Data strategy is key

A poll of leaders including Chief Operating Officers (COOs) and heads of operations from a cross section of Europe’s asset managers found that 64% were pursuing a multi-provider  model of outsourcing providers, SaaS and in-house solutions over the next 2-3 years.

But all speakers agreed that having a clear data strategy is key. This focus on data will not change — it underpins everything and is the forefront of operational focus going forward, the event heard.

According to one COO at a large global, well-known European asset manager, firms should adopt a “clear data architecture” as “the only way to achieve optimization.”

A partner and head of operations at one of the world’s fastest growing global asset managers noted that data stores should be created once, validated once, and then used multiple times – avoiding the need for multiple databases to be continually reconciled. This approach enabled a range of positive impacts, including a 50% reduction of staff tasked with running operations since 2016. Their business has seen staff move up the value chain as “operations engineers” instead of analysts, putting the power in the hands of these operatives to push through enhancements closest to the processes they manage.

Another head of investment operations at one of the world’s largest asset managers also commented, “The future operating complexity and market environments will continue to change at a good clip, so it makes sense to plan for flexibility across service providers, technologies, etc., and expect to need to pause, assess, adapt regularly.”

I think it’s safe to assume… we’re going to see rapid change.

Which model best describes your approach for evolving your operating model over the next 2-3 years (%)?

Source: BBH data gathered from poll of 44 senior operations leaders at InvestOps Virtual Boardroom Europe, 24 March 2021

Incremental change amid COVID-19

The COVID-19 pandemic has led to uncertainty for many businesses, heightening the execution risks that come with embarking on broad, business-wide IT projects.

Firms are mitigating these risks by enabling their services to operate independently and interact through smart data architectures and flexible solutions – what we call a modular approach.

Individual operations, such as an asset manager’s post-trade processing, connectivity to a third-party systems or front-office data store, can then be changed out independently. This lets businesses tackle the highest priority operational problem areas quickly with reduced execution risk and less business disruption.

Choosing the right provider

Another theme that emerged at the event was the need to select the best partner to deliver an interoperable data strategy. Conference speakers agreed that  one service provider can’t be best at everything —interoperability and bringing data together is key to achieving best of breed.

Starting with the right provider is essential – a provider that can facilitate data accountability and agility can help an asset manager achieve an ideal operating model. Those managers that focus on accurate, complete data built off the back of provider servicing -- good valuation, timely transactions, with the proper real-time reconciliation and lineage – are well positioned for the future.

BBH Investment Operations, powered by Infomediary is a suite of managed service and technology products that when taken together support the core of an asset manager’s middle office in a flexible, modular solution.  

Each main component has been designed to work independently of each other, and can be combined with products from other service providers and with internal processes for clients that want fast results, or a multi-service provider model. 

Crucially, BBH also solves the single greatest challenge of a multi service provider approach; data integration. BBH’s Infomediary is a powerful post-trade data integration engine that streamlines data transfers, standardizes information flows, and creates a secure, flexible data connectivity layer. Our experts can work with you to build an efficient, resilient operating model without sacrificing flexibility or control over your data, your preferred systems, or your business strategy.

If you would like to find out more about how a flexible, interoperable approach to investment operations can help your business, please contact: 

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