The third annual BBH US Consultant Exchange, “Powering Potential,” was held in Boston in May. The event brought together consultants and industry influencers for an interactive discussion on market opportunities, industry challenges, and the ways BBH is helping its clients unlock potential in their operating models. What follows are themes presented at the event that BBH believes will shape the future of our industry: business transformation, middle office efficiency, data, and digital solutions.
Thriving requires transformation
In an industry landscape defined by shifting investor preferences, fee pressures, and rapid technological development, nearly every area of asset management is evolving. Compounding these challenges are heightened regulatory complexity and intense competition among global managers. It’s safe to say that the asset management industry has never been more complex or more competitive.
Despite these challenges, some asset managers continue to thrive. The firms that are delivering superior absolute and relative performance have been able to do so by confronting change head-on with measured, thoughtful approaches. This embrace of new ideas and strategies is not new to the industry. But the speed of change and elevated focus on “applied business model transformation” does make this era stand out.
As asset managers look to the future, BBH has also shifted its strategy to focus on its clients’ transformation efforts. As part of its strategic reframe, BBH has made material investments in technology while hiring talent for roles that require different skillsets. All of these investments are supportive of what BBH has determined to be its clients’ primary priorities: operational efficiency, growth and performance, and transparency and control. As a result, BBH now provides a host of new digital platforms and services, from next-generation technology solutions that can help solve complex operational issues to delivering data efficiently and securely. In the middle and back offices, BBH has redefined its own internal operational processes by deploying technologies like robotic process automation (RPA), artificial intelligence (AI), machine learning, and natural language processing systems.
While many of these initiatives are relatively new to the industry, BBH has been employing similar concepts for more than fifteen years, beginning with its launch of Infomediary in 2001. Pragmatic transformation, when done well, should emerge from existing competencies, competitive advantage, and domain expertise. This is certainly the approach BBH is taking in combining digital data and technology solutions with its own domain expertise as a securities services provider.
In the middle office, one size doesn’t fit all
In the past year, several notable industry acquisitions have put a heightened focus on the “end-to-end” one-provider solution strategy for front, middle, and back office technology and servicing. This concept, however, is not necessarily the right solution for all asset managers, especially those dealing with pronounced operational complexity.
For many managers, legacy technology and overloaded operational models present challenges that a front-to-back solution simply won’t be able to solve. To confront these obstacles, managers, above all, need flexibility. That’s why many are pursuing operating model solutions that are horizontally minded, not vertically minded. What does this mean? First, data is a key component that lubricates the entire operating model, allowing information to move seamlessly from one area to another. Second, it takes into account that operating models are inherently dissimilar to the next – no two are alike. Finally, a horizontal approach is non-hierarchical by nature. This allows the manager to address pain points in a phased approach, while building to a holistic solution. At BBH, modular technology allows the manager to define and grow with an optimal operating model that minimizes execution risk, offers oversight and transparency, and, in some cases, reduces cost. In short, a horizontal approach provides flexibility.
This all leads back to the idea of pragmatic transformation. As asset managers confront industry challenges, incorporating new initiatives methodically and incrementally is key to success. Many managers do just that, treating the middle office as the building block for a phased approach to their overall data strategy. BBH takes a consultative, whiteboarding approach with clients to help them work up to a full middle office solution or uncover the highest priority operational pain points. For BBH, it’s all about adding value where it makes the most sense.
Data is like money
Data is a lot like cash – every time you send it, you risk it getting into the wrong hands. For asset managers, data is at the heart of nearly everything they do. It’s fueling new software, AI, and automation. It’s also fundamentally reshaping processes across the front, middle, and back office. But as asset managers increasingly use multiple-providers, many receive the same data from different sources, which adds complexity to an already challenging operating environment. Asset managers, above all, need aggregated data that they can access simply and efficiently.
To harness the full power of data, asset managers need to conceive of data as a unique, wholly separate asset that can be deployed securely and accurately at any time and to whomever they choose. At BBH, data is treated as an asset. Servicing data this way – as a flexible, efficient, easily-accessible asset – can go a long way to helping asset managers streamline their operating models. And as they pursue best-of-breed digital solutions, having segregated, serviced data means they can integrate faster, scale quicker, and adapt to new challenges with greater ease.
With nearly two decades in the data space, BBH brings a “servicer mindset” to the equation. This entails enabling its clients to see data across all of their providers, while building a data fabric that centralizes data into a single source of use.
User-centric design is driving digital development
Across the asset management industry, user-centric design continues to pave the way for new digital innovation. This is evidenced by easy-to-use investment products like exchange traded funds (ETFs) and investment analytic platforms that help investors research complex trades. While good design often connotes simply a beautiful product or platform, it’s not often known for its utilitarian aspects. A well-designed product or digital experience, however, solves a human need and is something which users want to engage with repeatedly. So, it can be said that at the heart of every great digital experience is an end-user. As a custodian, BBH is in a prime position to develop digital tools with an end-user in mind. After all, a custodian understands the regulatory and operational needs of asset managers as well as the importance of security and safekeeping – this insight and experience allows BBH to cater platforms to the modern asset manager like no other.
For example, Infuse™, BBH’s new digital client experience, uses a modern visual interface with a cohesive and intuitive user experience that unifies BBH’s horizontal product offering. This new experience offers more direct and efficient delivery of data to enable client’s analyses and decisions, and access to a configurable dashboard that surfaces insightful and useful information. It was designed for decision making.
BBH’s FX Hedgehub™ product and Alternatives Hub on Infuse are others examples of placing the client, or user, at the center of the design process. Both user experiences simplify and enhance the day-to-day activities of our clients with the delivery of these oversight discovery tools that can be incrementally expanded with more products, data and capabilities over time. These tools allow clients — and the BBH teams that service them — to more efficiently manage processing activities and make more informed decisions in real-time through intelligent digital tools and data visualizations.
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