Key themes from IBR Investment Operations Challenges 2023 Forum in Sydney – By Scott Taylor, COO
Scott Taylor, COO of AlphaCert recently attended and spoke as a panel member at the IBR Investment Operations Challenges 2023 Forum in Sydney where the following themes were discussed. Our next blog by the panel facilitator Stephen Huppert , Independent Consultant, takes us through the themes from the wider conference.
Better fund decisions start with quality information…not instinct.
A truly successful data driven operating model is simply about creating a central data management capability and using that to drive a range of key transformational outcomes through the power of automation, technology, and people. Investment remains fundamentally about confidence. Knowing that people are making good decisions based on clear and accurate data ultimately builds confidence.
A data driven approach can provide funds with a significant competitive advantage. Data management platforms such as AlphaCert, automate the flow of investment data from the back office to the front office teams as quickly as possible. The AlphaCert platform ingests data from custodians and other internal and external systems, delivering high levels of data accuracy. This first phase of data management is critical and lays the foundation blocks for significant opportunities to leverage quality data. Automation can then deliver highly accurate data to the right people as quickly as possible.
We discussed the following themes in detail on the panel.
Regulatory reporting continues to require more manual effort and time. APRA (AU) and FMA (NZ) require more detail, more regular and ongoing reporting. Automating these processes is critical to ensure quality, accuracy and timeliness and remove manual risk.
Funds are at varying stages of the data maturity cycle. It is important to remember it is a journey and solutions will vary based on business requirements. Start off with a current state view of your existing systems and look for solutions to current business problems so you can prioritize delivering value. The AlphaCert Data Management Maturity Model is a helpful self-assessment tool.
Recruitment and people capability continues to be challenging, particularly in data. Using external service providers and partners to provide additional ‘top-up’ capability, and help uplift internal capability, is a great way to accelerate your transformation program.
The role of custodians
Get the right data delivered on time. I was asked whether I see custodians as competitors. Custodians have a role to play in delivering accurate data and this is to be expected. If you gradually let custodians in the door to do more of the database management, you are essentially hedging all your bets on one provider. If you have issues with a custodian under this model it becomes a multimillion-dollar project to change custodians. Custodians are a key part of the data ecosystem but could make it easier to deliver the right solutions to customers by ensuring easy integration with third party systems. Essentially, investment data management, automation and integration are not the Custodian’s core business. All service and data providers in the fund management industry will offer some level of data management, but only an Investment Data Management platform can integrate them all seamlessly.
Insourcing vs Outsourcing
Some funds are building up internal development capability and creating bespoke systems. Ultimately this approach will require hiring people over time as funds scale and grow. Insourcing also has the risk of building up internal key person dependencies and this should never be a desired outcome. Outsourcing helps create redundancy and provides specialist capability in technology which is not core to funds. A combination of expert domain knowledge and technology solutions from the provider leads to very powerful solutions that can meet specific requirements.
Important to have strong Executive buy in for data transformation.
Visionary leadership is key for organisations to improve their levels of data maturity. How do we fix it? This should be the first question asked before we consider the cost. A clear understanding of what is needed to deliver on the business and investment strategy and deliver optimal returns to members is what is needed from the outset. A pathway to success and growth comes from having the courage to create solution designs that are going to meet the long term needs of the organization. It is very costly if you get the solution design wrong from the outset.
Choose your partners carefully.
A consultant presenting at the conference showed a slide with a list of vendors in the market for data management. This was not an exhaustive list and missing industry leaders present at the conference. This consulting firm talked about the RFP selection process and how they can reduce the short list selection based on their knowledge of the industry! Clearly if those consulting firms are going to be providing advice, then it is vital they need to understand the full range of capabilities in the market.
Key future trends
In addition to the key themes discussed above, there were some topical observations and future trends that were identified in the discussion.
- Organisations that have not embraced the Cloud will. It is becoming more and more important for organisations to embrace the Cloud and those that do not will be left behind and struggle.
- Ensuring flexibility, scalability, and efficiency will be key. This will also help foster innovation. Data security is more than a concern, it is a priority.
- Robust data governance programs to enhance data quality will be key for increasing regulatory requirements.
- Stay tuned on AI developments in our industry. AlphaCert’s product team are already exploring the use of tools available to make data more accessible as the volume of data continues to grow and types of data evolve.
- Everyone knows the growing importance of Environmental, Social, and Governance factors (ESG). We are doing some work in this space to make data more accessible to funds.
Overall alignment on companywide aspirations and company goals is key. When everyone has access to accurate data with a strong data governance framework, data becomes more than just a single point of information. It becomes the North Star.