Key Insights from IBR Conference’s Investment Operations & Challenges Forum 2024

Independent Consultant Stephen Huppert shares his insights from the recent IBRC Investment Operations and Challenges Forum in Sydney. 

The 7th annual Investment Operations Challenges Forum was a landmark event for the investment operations community. Bringing together around 100 industry professionals from Australia and New Zealand, the forum offered a comprehensive exploration of the sector's most pressing issues and emerging trends. From the impact of AI on operational efficiency to the challenges of regulatory compliance in an increasingly complex landscape, the event provided a platform for robust discussions and valuable insights. 

Setting the Stage: Keynote Address 

David Travers, CEO of the Australian Custodial Services Association (ACSA), gave the keynote address, setting the scene for the two-day event. He highlighted key factors putting pressure on investment operations teams, including increased regulatory scrutiny, market volatility, ESG compliance, cost management, data privacy and security, client reporting demands, cross-border operations complexities, liquidity management, and operational resilience. 

Operational Resilience and Compliance 

Travers then led a panel discussion on operational resilience and compliance with APRA's CPS 230 standards. Key points included the importance of robust risk management frameworks, the need for cultural changes in strategic thinking, and the role of senior management and boards in accountability.  

Several other speakers across the two days highlighted the importance of taking a strategic approach to operational resilience and risk management.

The Power of Data Management 

AlphaCert GM of Growth & Strategy Scott Taylor presented on implementing an Investment Data Management (IDM) Platform. He focused on the importance of IDM platforms in streamlining operations, saving time, and enhancing decision-making. His key points included the automation of data ingestion and validation, the integration of data sources, and the critical role of data quality in regulatory compliance.  

Taylor highlighted the importance of making a start and explained that an IDM platform can be implemented quickly with dedicated capability and the right partner. Success stories from Investment Services Group and AustralianSuper highlighted the benefits of having an IDM platform to ingest data, transform and validate data, and then push data to reporting and analytic tools.  

He concluded his presentation with a Maori proverb: "He aha te mea nui o te ao? He tangata he tangata he tangata!” (What is the most important thing in the world? It is people, it is people, it is people!). 

A panel discussion on The Power of Data-Driven Investment Management focused on the evolving role of data in asset management, emphasising the importance of data quality and governance. Consultant Alan Artyun speculated on the potential risks of the proliferation of Python code in investment operations teams. He wondered whether, in the future, we will be talking about this risk as we talk about Excel risk today.  

Navigating Operational Challenges 

In a presentation that resonated with most of the audience, David Johnson of IFM Investors, lamented there is always “one more thing” that the business expects the investment operations team to do. His approach is to focus on what matters most and ensure the team is aligned to the organisation’s strategic journey: simplify, optimise and innovate. Johnson highlighted the need for good governance, which doesn’t restrict, but rather empowers and expedites action. He also highlighted the importance of connecting and communicating within the team and across the business to build awareness, manage expectations and articulate the journey and the challenges. 

Managing transitions and transformations 

AlphaCert GM Australia Mark MacLeod moderated a panel on navigating custodial transitions. The panel was unanimous in the critical role of pre-planning in a successful transition. The discussion emphasised the necessity of thorough testing and the role of post-implementation reviews, focusing on maintaining operational resilience and leveraging technology solutions to enhance efficiency and service quality. 

The panel also discussed applying similar approaches to Successor Fund Transfers and other significant transformations. 

Key Trends and Takeaways 

Several overarching trends emerged from the forum: 

1. The growing importance of data management and governance in investment operations.
2. The need for operational resilience in the face of increasing regulatory pressures.
3. The critical role of technology in streamlining operations and ensuring compliance. 
4. The importance of strategic alignment between operations teams and overall business objectives 
5. The ongoing challenge of balancing innovation with risk management 

Looking to the Future 

As the investment operations field undergoes a profound transformation, driven by regulatory change, technological innovation, and evolving market demands, several future developments seem likely: 

1. Increased adoption of AI and machine learning in data management and analysis 
2. Greater focus on cybersecurity and data privacy measures 
3. Evolution of operational models to accommodate more complex, global investment strategies 
4. Continued emphasis on ESG integration in investment operations 
5. Development of more sophisticated risk management tools and practices 

The 7th annual Investment Operations Challenges Forum not only provided valuable insights into current challenges but also set the stage for how the industry might evolve in the coming years. As operations professionals continue to navigate this complex landscape, events like this will play a crucial role in shaping strategies and fostering innovation in the field.