Buy Side To Tackle Issues in ’15
The asset management industry is continuing to navigate through an intense period of regulatory change that has had a major impact on business performance and operational risk.
In 2015, the industry will aggressively seek to defragment the technology, data and services most critical to improving business performance and reducing operational and reputational risk, according to Todd Moyer, executive vice president, global business development at Confluence.
Moyer told Markets Media that in 2015 the saturated back-office technology landscape will undergo significant consolidation, the Chief Data Officer (CDO) will assume a prominent position in the financial services C-suite, and the proliferation of fund product types will pressure fund administrators to adopt a holistic approach to technology.
“The active regulatory environment of the last few years has led to a flood of new data and technology solutions for asset managers as they have had to adopt and manage new requirements for the business,” said Moyer. “The flux of new, single-function technology has lead to a fragmentation of the back office, which increases operational complexity and risk, and diminishes the value that each solution provides to the user.”
Asset managers are becoming less willing to work with vendors that don’t offer a broader range of solutions. This has a number of implications – for example, the drive to defragment the back office will lead to an active M&A market in the financial technology space.
“We just completed an acquisition of Orfival, a firm that focuses on portfolio management and analytics solutions,” said Moyer. “SS&C also just recently acquired DST Global Solutions. We can expect to see more deals like this as the industry focuses on consolidation.”
As the industry learns of the impact good data management could have on a business’ bottom line, the role of CDO will become increasingly important. As CDOs are increasingly viewed as the key driver of converting data assets into business opportunities, data initiatives will become a bigger focus of planning at the board. Moyer said that CDOs will become the C-suite member who has the single greatest ability to transform how the asset management business operates in the years ahead.
“Now firms must figure out how to make the best use of that data to grow their business,” he said. “CDOs will be asked to develop a plan to manage, enrich, protect, leverage and monetize enterprise-wide data assets in a way that can drive efficiencies, reduce risk, and grow the business. CDOs will be the key drivers of converting data assets into business opportunities; they are going be the critical ingredient to help bridge the gap between the business and its fragmented data and technology.”
As asset managers focus on defragmenting back-office technology and fund data to reduce operational risk, they will lean on the vendor community to provide broader functionality through a single platform.
The prevalence of single function technology products has diminished the value that each offers, as managing a growing number of vendors and data sources has started to increase operational risk for asset managers.
In a survey that Confluence conducted in September, four out of five asset management professionals whose firm uses multiple applications in the back office said that consolidating that technology would help their firm achieve higher operational efficiency. Nine out of 10 respondents said it was important for their firm to consolidate fund data into a common database.
“Investor demand is driving hedge fund managers into the mainstream marketplace, as evidenced by the incredible momentum in the growth of liquid alternatives funds this year,” said Moyer. “As asset managers are diversifying their offerings, they are putting pressure on their service providers to broaden their offerings to support their new business model.”
The not-for-profit initiative will make it easier to ensure funds are comparable and clear about costs.
Most buy-side firms miss alpha-generation opportunities by not using granular ESG data.
The acquisition reinforces Schroders’ private assets and real estate capabilities.
ICS, a digital platform provides transparency and comparability of the impact of investments.
Buy-side trading head has somewhat warmed up to the notion of trading from home.