How BPaaS is Shaping the Future of Capital Markets

The development of modernized platforms, open APIs and integrated data flows is opening the door to a new type of service: an end-to-end ecosystem that’s delivered as a Business Process as a Service (BPaaS). A successful BPaaS will not only bring down the cost of operations for our clients and their customers, but it will also reduce friction between the component parts of the ecosystem.

To move, manage and grow money across the global capital markets, our buy-side, sell-side and wealth management clients provide end-to-end services to each other, to end investors and to intermediaries and regulators. It’s a complex, fast-moving web of transactions across a component architecture consisting of front, middle and back offices. And, to link it all together, there are specialist technology applications that create an overall capital markets ecosystem.

It’s enough to make your head spin. More importantly, it’s evolving into too much to accomplish with any amount of scale and accuracy without digital technology, advanced automation, and outsourcing partners.

BPaaS in Practice

For example, today’s fund administrator provides a middle-to-back service to its asset manager clients. This typically is supported by multiple platforms, which are maintained by the administrator, the asset manager client, and sometimes intermediaries and vendors. The gaps among these various platforms are usually bridged by manual operations and internally developed systems.

Now imagine that the fund administrator has adopted BPaaS from a fintech provider that has invested in and deployed cloud-enabled capabilities with open APIs and digitized data flows. Now it can offer its asset manager clients analytical tools to help with decision-making in active markets and provide artificial intelligence and automation to execute on all elements of the processes from end-to-end. That allows the asset manager to focus on managing its portfolio to optimize asset growth and minimize risk – which is exactly where its expertise is best deployed.

And because this is a componentized BPaaS, our fund administrator can outsource only the functions it wants to hand off, freeing up its team for higher value-add contributions and retaining the profitable, strategic areas it wants to keep in-house.

Meanwhile, the fintech BPaaS provider manages functions for multiple firms with process automation, so it can super scale processes in the most cost-effective and efficient way – and the fund administrator’s and/or asset manager’s overhead continues to decrease.

Moreover, many of our customers are already outsourcers. With this model, they can “white label” the service as their own and offer it directly to their clients, boosting their client service proposition and their brand to support growth, while becoming more efficient themselves.

BPaaS Is the Future of Outsourcing

But the componentized approach of digitized everything has another benefit. Rather than do all things in one piece of technology, it makes data compatible with multiple best-in-class pieces of cloud-enabled technology. Because the platform is modernized, your data becomes more available, while advanced tech automates and scales it all the way through. That creates a seamless flow of data from end to end, front to back, and back to front. The component parts are also easy to lift out and pass back into the chain.

Overall, BPaaS is the next evolution of outsourcing – and the outcome of investments made in platform modernization and advanced technology.

Editorial Note: This article was originally published in February 2021. It has been updated for accuracy and comprehensiveness.