In the fast-changing investment management space, firms are increasingly striving for streamlined processes and all-in-one solutions that can save time and resources, align teams and reduce errors and inefficiencies. Legacy and fragmented systems are resulting in an array of operational issues and firms struggling with these systems are losing ground on the competition. We explore why integrated investment management is the future, the key challenges and benefits of integrated solutions, and what to look for when seeking a provider.
Challenges that asset managers face with fragmented systems
Asset managers are under pressure to deliver the best possible results and carry out sophisticated analyses of portfolios, market conditions and investment opportunities, all while ensuring they remain compliant with the latest regulations. At the heart of it all is the data. But if the data is not comprehensive, accurate, readily available or easy to view, analyse and evaluate, it will hinder asset managers. And this will impact results and their reputations (and ultimately revenue).
According to IBS Intelligence, just 4% of investment managers are happy with their data management systems. It’s a stark statistic highlighting the need for change across the industry.
So, what are the main challenges that fragmented systems present for asset managers and their firms?
- Disparate data – this is the bane of asset managers’ work, as manually combining data sets and sources and trying to make sense of it all is time-consuming, hugely inefficient and prone to errors. Battling increasingly complex and unstructured data sets, firms need integrated investment management solutions before their data sources become entirely unmanageable.
- Lack of visibility – without confidence, control and visibility over your data, you’re limited in the level of sophistication of your analysis, therefore impacting investment suitability and performance.
- Risk and human error – legacy systems and fragmented data lead to errors, inaccuracies and inefficiencies that will expose your firm to risks, which leads to financial and reputational damage. Additionally, changing regulatory challenges add complexity, costs and operational stress when working with disparate data and fragmented systems and processes.
- Manual investment workflows and poor user experience – usability expectations have significantly heightened as we’re used to a certain level of user experience from apps and platforms we use in our everyday lives. Legacy systems cause employee frustration, magnified by asset managers having to carry out laborious manual tasks that feel unnecessary in an age of digital innovations like cloud computing.
- Remote working demands – as in other industries, meeting remote working needs is a high priority. In investment management, if remote staff don’t have the capabilities to do their job as efficiently as those in the office, firms will simply lose money. Plus, organisations need to work harder to ensure data access and management in remote locations are as secure as possible and that compliance obligations are being met.
- Lack of infrastructure flexibility and scalability – as data volumes and complexity increase, firms can struggle to cope if legacy systems don’t have the flexibility or scalability to accommodate evolving requirements.
Why Operations teams are seeking integrated investment management systems
Operations teams are often seen as the back-office grinders working on tweaking and optimising processes to empower asset managers to do their job more efficiently. However, their work is increasingly helping to impact firms’ bottom line and create a competitive advantage. And they need to have their say when it comes to identifying issues with current systems, defining the needs of the business in the context of new investment management solutions, and the procurement process of new, integrated platforms.
Many firms have built their infrastructure over time, using custom code to bolt on new features to meet operational requirements. But long-term, adding new features, incorporating upgrades and ongoing maintenance become harder and start haemorrhaging costs.
For asset managers to do their job better, faster and more efficiently, Operations teams are looking for ways to consolidate data and streamline tasks. You need to sync up your tools and align your processes for a more holistic view of, and control over, your data. And that is where an integrated investment management system comes in.
Key benefits of integrated investment management solutions
So, what are the advantages of implementing integrated investment management solutions? We outline 8 key benefits below:
1. Data consolidation
Consolidating your data is the biggest benefit of integrating your tools. Jumping from platform to platform or from your software to a range of Excel sheets is time-consuming, frustrating and inefficient. Using integrated investment management solutions means all your data is in one place. You can slice and dice it, run it through stress testing and create dashboards and reports without the dreaded swivel-chair problem and laborious manual data input.
Cloud-native solutions enable your firm to centralise data, integrate key tools and systems and empower your asset managers.
2. Automation and innovation
Automation in investment management is an absolute must-have for asset managers. One Asset Management Trends 2021 report predicted middle and back-office employee costs will reduce from 50 to 20% for firms using automation. Automating key asset management processes will significantly increase efficiency, minimise errors and reduce operating costs and risks. It’s not about replacing roles or duties, but more about alleviating human intervention where it’s unnecessary, freeing up asset managers and analysts to work on other tasks that can help grow the business.
Using innovative tools is key to operational efficiency and maintaining a competitive advantage. Introducing automation and innovation where it’s needed most is key, whether it’s in addressing multiple IBORs, eliminating siloes or advanced data calculations, it will help you achieve greater agility, efficiency and growth.
3. Greater flexibility
Following on from this one-stop-shop for data is the flexibility that integrated solutions allow. Being able to incorporate the benefits of your different systems into one platform, configure it to meet asset managers’ needs and create the data/reporting views requirement for analysis, investment decision making and exporting for other key stakeholders can greatly enhance how you use your data.
In Alpha FMC’s Data Operating Model survey, 56% of respondents highlighted “flexibility” as the primary driver for cloud adoption. Cloud-native investment management solutions enable investment managers to change and augment their architecture like never before.
4. Scalability (leveraging the cloud)
Cloud-native investment management solutions offer firms the scalability required to meet their growth ambitions. As you add more funds and asset classes to your portfolio, data and analysis requirements become more complex (as do regulatory considerations). And there will come a point where your legacy systems and processes can’t cope.
Scalable solutions can grow with your business as your client and user base grow. Future-proofing your firm for growth and change is key and fragmented systems will no longer cut it. Utilising the cloud to manage and accommodate data efficiently enables you to drive better performance and greater efficiency and scale your firm and its ambitions whilst reducing waste and costs.
Learn more in our whitepaper on How Asset Managers Can Unlock Competitive Advantage with Lower Operational Risk.
5. Real-time analytics and platform updates
Having all your systems and tools fully in sync means achieving a single source of truth and accessing the most up-to-date information. Integrated, cloud-native solutions can pull the latest market data into the platform, from various sources, enabling asset managers to perform real-time portfolio analytics, including monitoring, risk insights and stress testing. This increases visibility, reduces risks, errors and misalignment and empowers decision-making.
6. Exceptions-based differentiators
Integrated investment management gives Operations teams the capabilities to identify and resolve issues quickly and efficiently, thanks to sophisticated data analysis, automation and even machine learning. Exceptions to rules and pattern detection will help you reduce operational risk.
7. Modern user interface (UI)
Overhauling your legacy systems with new, cutting-edge investment management solutions, in most cases, will mean a much more intuitive and user-friendly experience. Data will be much easier to view, clearer and more engaging for both asset managers and clients, whilst an intuitive UI will mean your teams can hit the ground running without extensive or ongoing training.
8. Better support and less maintenance
Using cloud-native solutions to integrate your systems will usually mean less strain on your in-house IT teams, with maintenance and support managed by your solution provider. Depending on your needs and the software you choose, you may get dedicated account managers to help you maximise the potential of your tools and your firm’s ROI.
How to judge which investment management solutions are right for your firm
So, you can see the benefits of integrating your tools and processes and doing away with legacy, fragmented solutions. But how do you know what vendors to choose and which platform best suits your firm’s needs? Consider the following criteria and questions when judging the suitability of integrated investment management solutions:
- Flexibility/scalability – how flexible is the solution and how easy it is to scale as your business grows? Find out if the solution can scale in line with your growth trajectory.
- Configuration capabilities – does the solution allow you to configure complex and multiple data sets, change naming conventions and customise dashboards to meet your specific needs?
- UX/UI – how easy to use/intuitive are the tools? Can you get a demo or trial of the software to see the features and functionality in action? It’s a great help to see the solution in action, especially if you can try it out using your own data.
- Ease/speed of implementation – how easy are the solutions to implement/integrate and how fast is the onboarding process? Learn about potential timelines and establish likely downtime, if any, during implementation.
- Support/maintenance – what level of support will you get and is it dedicated? Who is responsible for platform maintenance, security, updates, etc? Establish what training and support are available during implementation and ongoing.
- Costs/pricing model – what are the software’s upfront costs and ongoing payments? How does the pricing model work (in terms of monthly costs per user)? Related to scalability, define how costs increase and to what degree when scaling up.
- Features and functionality – How sophisticated is the software? Can you get a full run-down of the tools and capabilities of the software? Beware of ‘feature blindness’. Lots of fancy tools and innovative tech are alluring but mapping functionality to your needs and pain points (for now and the future) is more important.
- Integration capabilities – can the software provide an end-to-end solution to cover each step of the investment management process (either as an all-in-one platform or through third-party integrations)? Get the full picture of what is achievable.
For more insights, read our blog on the key questions to ask yourself when procuring an investment management system.
Introducing Limina’s cloud-native investment management solution
Limina is the world’s first cloud-native investment management solution for institutional investors. Our cutting-edge technology can transform your firm’s workflows and empower asset managers to do their jobs without being hindered by their systems or limited by time spent on manual tasks.
Our solution is designed for asset managers by asset managers, and we believe in the power of Open Source. Limina’s integration with OpenGamma’s Strata matches our vision to provide seamless workflows in a customisable platform.
How Limina’s solutions have helped firms to grow their businesses and reduce operational risk
We’ve helped our clients to grow their businesses through transformative process change and reducing operational risks that plague asset managers working with fragmented systems and disparate data.
Learn how asset managers use Limina to modernise investment flows, drive business development and lower operational risk in our investment management platform case studies.
An integrated modular investment management system: order management, portfolio management and portfolio analytics
Limina is a seamless, integrated, modular investment management system that covers order management, portfolio management, compliance and real-time risk management. Asset managers can enjoy an intuitive user experience accessible from anywhere and on any device.
Explore our benefits and use cases and discover how our cutting-edge platform can help you:
- Make more informed decisions
- Gain great oversight with consolidated views
- Meet regulatory requirements and avoid compliance breaches
- Boost efficiency and empower teams across the business
- Achieve a single source of truth for data
As you can see, fragmented systems are no longer fit for purpose in today’s investment management environment. And if you struggle on and are slow to adopt new technologies and embrace the cloud, your firm will get left behind. It’s time to overhaul legacy processes and infrastructure and seek integrated investment management solutions that can meet your needs, reduce operational risk and empower asset managers to thrive.
If you’d like to learn more about the key considerations for selecting a suitable solution for your business, download our free guide on how to choose the right investment management software. Or explore our solution and discover the benefits Limina’s Investment Management Software offers.