Fund operations - The rise of the machines
Fund operations - The rise of the machines
Ocorian Alternative Investments Director, Richard Hansford explores how the role people play in the day-to-day management of fund operations is changing and examines the opportunities and challenges this poses for the industry.
Over the past 15 years, alongside regulation, the evolution of technology has been one of the biggest trends in the fund administration industry.
In years gone by, we had almost all fund administrators using Excel; then we had Excel alongside fund administration systems; and now we have standalone administration platforms capable of the most complicated equalisation and carry arrangements, where we rely on the system.
With the continued evolution of platforms such as Investran and eFront - which was recently the subject of a buyout by BlackRock - fund administrators are looking to leverage off the continued investment made in tech platforms to support and manage key fund operations such as capital calls, equalisations, fund closes and distributions, to name but a few. But utilising such platforms is simply not enough in today's crowded market place.
As challenging market conditions cause investors to search for yield with increasingly international scopes, portfolios are becoming ever more complex. Investors are demanding more in terms of transparency in operational outputs, access to information and compliance. These demands are forcing fund administrators to evolve at unprecedented levels, pushing them to adopt specific technology that provides solutions to support the full fund life-cycle. Technological capabilities are now a necessity for fund administrators to survive.
A different kind of arms race
At Ocorian, we see our development and continued evolution of our technological infrastructure not as a destination, but a journey which requires continuous investment. By supporting this journey financially and through hiring the right expertise, we are able to ensure we remain at the forefront of the technology arms race currently taking place in the fund administration world.
For example, Robotic Process Automation (RPA) is now getting a fair amount of coverage in trade publications, and rightly so. This technology can not only be used to create internal efficiencies, but also significantly speed up the delivery of information and outputs for clients and underlying investors via controlled environments. 'Data on demand' is the future of fund administration.
The ability for GPs to access fund and portfolio data, run customised reports at the click of a button from mobile devices, tablets and desktops is becoming a reality. By ensuring that GPs have accurate and informative data outputs at their fingertips, they are able to make strategic decisions that are more informed and done within a shorter time-frame and as a result, they can capitalise on new opportunities.
But how is robotic technology and RPA influencing the client relationship model? The notion that artificial intelligence will replace people within a very people-led industry is certainly not what we foresee in the short to medium term. People are the originators of ideas and concepts, overseeing fund operations and client outputs; the technology is simply the enabler.
By leveraging off the intellect and experience of our industry professionals, we are able to build and develop new technology and operations to address evolving market factors. As a result, we can spend more time speaking and listening to our clients regarding their future requirements, ensuring that we are at the forefront of developments.
A challenge worth tackling
Undoubtedly, the combination of increasing investor vigilance, compliance requirements and the advancement of technology is challenging fund administrators. This challenge will become too much for those administrators that are still very Excel based; which seems unsustainable given the increased scrutiny LPs are placing on the importance of administrators to have dedicated systems to support fund operations.
In order to keep up and stand out from the competition, fund administrators must engender a culture that supports sustained and ongoing investment in their IT infrastructure whilst advocating the sharing of information. The advancement of technology is an opportunity, an opportunity to harness and utilise a robust technological infrastructure that can provide flexible and bespoke solutions.
At Ocorian, we certainly feel that we are ahead of the game, having already employed RPA for a number of years. But the game is not over and the technological journey must continue in order to take advantage of new opportunities.
You can explore Ocorian's range of fund administration services here.