Author: Chris Andraca
This report is a “must read” for fund administrators. It paints an urgent picture about the importance of technology in the alternative investment industry. This study connects directly to the work that we’re doing here at BaseVenture.
This is most strongly evidenced by the following quote:
“Those administrators that do not invest in innovative technology could fail to provide the new and improved tools that asset managers are looking for – and risk being left behind.”
This quote will probably strike fear into many Fund Administrators, but it perfectly sums up the role that we play as a vital partner and enabler for our Fund Administrator clients.
Below are some overall themes that jumped out at us from this great report. These quotes have strong relevance to the work that we’re doing at BaseVenture:
1. Technology imperatives dominate the “Top 5 Trends” that will shape the future
There are 5 “Top Trends” that were listed as the key factors shaping the future for Fund Administrators. As you can see from the graphic below, 3 of the top 5 relate to technology.
Top 5 Trends
2. Regulatory and compliance requirements will have an increasing importance & impact
This theme was seen across several areas of the report, but it is best summarized by:
“To keep pace with regulation and the due diligence demands of investors, 89% of fund administrators anticipate having to make investments in new systems and technologies before 2020.”
“Unsurprisingly, more than half of administrators (51 percent) predict that the need to keep pace with regulation will have the greatest impact on their activities between now and 2020, making it the most significant asset management trend of the next four years.”
3. Differentiation by Fund Administrators will be indelibly linked to technology
As the sophistication of investors increases, the status quo service will no longer be enough for Fund Administrators:
“But, potentially more importantly, investors themselves are doing more and more due diligence on providers. It’s no longer good enough for asset managers to simply promise to generate a return from their black box, even if they have a long-term track record of doing so.”
Data capabilities across key processes, as well as real-time data and reporting will be key to enabling Fund Administrators to differentiate themselves:
“When technology tools are centered around exception management and workflow, automating standard processes, it elevates the role of the fund administrator. Freed up to work with asset managers on more complex scenarios, administrators can begin to take on the role of a business partner and add value at the service level.”
“Nearly a quarter (23 percent) expect to be affected by their clients’ increased appetite for risk insight, presenting a premium service opportunity for fund administrators in the form of big data analytics and segmentation.”
4. Competition is coming in multiple shapes & sizes
Competition is coming from friend and foe alike:
“In this uncertain, newly competitive environment, automation can help administrators protect their margins by enabling them to cut costs and increase scale.”
We are partnering with forward-thinking Fund Administrators to help them meet the critical & required needs outlined in this report.
Our Software-as-a-Service (SaaS) platform was built specifically for the alternative investment industry. It is focused on data relevance and transparency, and it enables easier and more auditable workflows to meet the growing regulatory and compliance needs. We help Fund Administrators better differentiate themselves by increasing the value and improving the service that they offer to their Fund Manager clients.
If you’re interested in more context, this is a comprehensive study that surveyed almost 60 Fund Administration executives spanning the globe. The representation among those Fund Administrators was broad, with a relatively even spread across a varying size of administrators. Size was determined by number of funds administered, as well as by Assets Under Management (AUM). Additionally, in-depth interviews of more than 15 leading asset managers, fund administrators, and other subject experts was conducted in order to add qualitative insights to the quantitative data.
You can find the full study here.
Learn more about BaseVenture and how we are helping Fund Administrators at www.baseventure.com
Source: All quotes and graphics included in this blog post were taken directly from the “From Coal to Diamonds: 2020 Vision – The Future for Fund Administrators” report