Transparent Is the New Black for Fund Servicers

When it comes to processing and reporting on fund data, it’s high time for administrators and servicers to think outside the “black box”. As more asset managers – and investors – demand a real-time view of their portfolios, it’s never been as important to provide secure but open access to data. However, for many firms, legacy systems still stand in the way of transparency.

Over the years, fund servicing operating models have evolved to handle the changing needs of the asset management community. And often the result has been a complex landscape of disparate, sometimes homegrown, systems that are hard (and costly) to integrate, upgrade or maintain. Above all, a technology architecture of this kind can lack the agility you need to respond rapidly to asset managers’ requests – not least for the right data.

Today’s asset managers require data faster, in more detail and on a greater range of instruments than ever before, from over-the-counter derivatives to illiquid investments such as private equity or real estate. Complex, multi-asset-class strategies and portfolios are becoming more the norm; and to report on them more effectively, the most progressive fund administrators and servicers are looking to simplify their systems and make them more responsive and transparent.

Traditionally, fund administration data has been processed in overnight batch cycles and delivered in packs to asset managers by the start of the next trading day. This daily reporting cycle is, however, becoming less acceptable to asset managers, who ideally want to see the impact of executed trades on their portfolio in real time, from a cash, valuation, risk and performance perspective. The days of processing data in a “black box” are numbered: the future lies in open architectures and APIs that update, publish, and make data accessible via web services in real time with consumption available through data feeds and dashboards with analytics and business intelligence.

And the future, for more and more firms, has already begun. From our clients, and through our signature research into industry growth, we know that fund administrators and servicers are now investing increasingly in technology, while recognizing that modernized operations are key to competitive advantage. Most notably, 83 percent see investment in data management as having a highly positive or positive impact on the speed, quality and ease with which customers consume their information.

Across the industry, firms are steadily chipping away at their legacy architectures and making them more agile, secure and connected. At the same time, moving systems to the cloud helps reduce the effort and costs associated with running, maintaining and upgrading them in-house.

But perhaps the biggest digital transformation is happening to the way fund administrators and servicers report to their customers, with self-service online portals allowing asset managers to automatically take the data and analytics they need from their administrator. Critically, 58 percent of the fastest-growing administrators, anticipate investing in online portals over the next 12 months, compared with only 28 percent of the rest of the industry.

Such added-value services have the potential to provide a new source of topline growth, while meeting customer demands head-on. What better reasons to replace that time-worn black box with a modern, transparent approach to reporting?