Financial Services Asset Management

Over the last two decades, banks, investment companies and all kinds of Financial Institutions have been placed under great pressure as new regulatory demands and increased expectations from stakeholders led to a regulatory reinforcement like never seen.

Social and cultural changes (like the rise of longevity and increased search for fixed income) and the inclusion of more international capital in investment strategies have taken the business to a whole new level of complexity. With different geographies and different rules, companies face higher costs and slower time to market.

It is not easy to seamlessly answer market demands: more rules to be compliant with, bigger scrutiny from stakeholders, and new financial instruments to respond to new investment needs. A reactive strategy implies a lot of resources (time, people and money) spent to meet market requirements, so it is not desirable.

What are the main challenges for asset management companies nowadays?

• End-to-End Flexibility - old solutions failing to provide teams with a holistic view of clients’ portfolios, trade information and market data, within the same interface;
• Business Scalability - time and cost-effectiveness on integrating new clients;
• Data Quality – in order to maintain compliance and identify risks;
• Cost Optimisation – costs, resources and time-consuming administrative tasks;
• Total Cost of Ownership - costs of multiple software licenses, with heavy training and maintenance costs.

Changing the Game with Technology

Investment in technology and data management can maximise distribution opportunities and help businesses cope with regulation and reporting. A strong back office solution is fundamental to be compliant, reduce costs and meet the fast-paced changing environment.

Business changes must be leveraged by technological support that provides the agility, flexibility and technical capability needed to respond to those changes in an effective manner.

Having a single solution to manage the entire asset management workflow will reduce costs in licensing and training. It will also provide business teams with an integrated view of portfolios, which can be crucial for profitability.

Besides process automation advantages, technology can bring better ways to monitor business. Artificial Intelligence and Machine Learning can be used to prevent and detect operational errors and make portfolio management faster and more accurate. These technologies can also improve trade surveillance, not only making it automatic, but also decreasing the excess of false positives or, at least, providing a more efficient way to assess risk associated with alerts. Using a Machine Learning model, alerts can be categorised and prioritised based on their risk.

The above mentioned are the main challenges that asset management companies face today. Of course, responding to those challenges will vary from company to company, as several factors are contributing to organisations’ ability to respond to market changes.

Technology can have a great impact on cost optimisation and risk mitigation and should be considered part of the strategy to achieve greater profitability.