Does your client-facing technology measure up?

Ankur Saxena, product development, client facing technology at MUFG Investor Services, outlines the five criteria firms should base their decisions when selecting their ideal provider.

With rapid advancements in data and analytics, today’s client-facing technology (CFT) has emerged as a competitive advantage for funds. It encompasses data, analytics, projections and other critical information – all personalised for investment managers and their clients.

As technology capabilities have soared, so too have client expectations. Investment managers, however, are hampered by outdated and fragmented legacy systems across accounting, investor relations, FX, regulatory reporting, cash investment management, investor services and other functions. Their clients’ experiences are similarly lacking and often cast the fund in a bad light.

Inadequate CFT has a huge downside. It limits information, lacks specificity and personalisation, and decreases a firm’s competitiveness. CFT is the firm – what it does, how it’s experienced, its strengths and differentiators – and it needs to be a prominent advantage. Many funds’ investment managers are therefore looking to upgrade, sometimes dramatically, to improve their experience and that of their clients.

The first issue for many is whether to rely on internal resources or, as is increasingly common, look to a specialised outside provider. Whichever route they choose, they will see the benefits.

Quality CFT can drive transformation by bringing enhanced business intelligence, analytics and reporting capabilities. Intelligence can be easily organised, reported and distributed, and analytics makes it possible to automatically build patterns and relationships across structured and unstructured data.

CFT enables faster processing of information, and reduced turnaround times for net asset valuation and other real-time calculations. As artificial intelligence and shared platforms become more prevalent, managers can predict outcomes with more certainty and make more informed decisions.

From a security standpoint, CFT enables transparency and control over information flow, with granular security permissions. It also allows firms to adopt more sophisticated data loss prevention tools and techniques.

Further, more CFT providers are going beyond traditional fund administration capabilities, assisting managers with operational overheads, processing and servicing challenges, and developing innovative ideas.

Guidelines for choosing a CFT provider

After weighing factors such as cost, maintenance and upgrades, many funds are opting for partnerships with CFT providers. Identifying and vetting providers can be challenging. Trust is an important consideration. Funds should investigate the provider’s history of delivering (or not) on projects, its leadership, and its presence and perception amongst the investor community.

As funds look to enhance their capabilities, they can get a clear understanding of the provider’s ability and suitability for their firm by asking questions in these five key areas:

  1. Capabilities and integration with current systems
  • What is the platform architecture?
  • What is the integration process?
  • What is the ability to extract or ingest data from the platform?
  • What are the reporting capabilities and is there real time or near time availability of data?
  1. Personalisation
  • Does the provider have custom solutions for different types of investors and fund types?
  • Can it accommodate custom reporting?
  • What will the client’s dashboard look like?
  1. Operational transparency
  • What is the model’s level of openness and connectivity?
  • What is the workflow to connect clients with the internal operating model?
  • How does the CFT handle oversight processes?
  • Does it offer exception-based reporting?
  • Does the CFT have advance warnings that can be monitored and communicated in the event of exceptions or delays?
  1. Efficiency
  • How scalable or expandable are the teams and platforms?
  • Would the addition of a new fund mean hiring more staff or investing in additional technology capabilities?
  • How reliable are the risk management capabilities and what do they entail?
  1. Risk-reduction and regulatory compliance
  • What is the risk culture? Is it proactive, reactive or sub-optimal?
  • What is the transparency level and is there is an effective learning and improvement process?
  • Is there a dedicated function for leading risk reduction and regulatory compliance?
  • How much engagement and familiarity is there with industry trends and regulators?
  • What technology updates or investments will be necessary over time?

Finding the right partner can substantially benefit funds, bringing speed, transparency, advanced analytics and risk reduction. Equally important, it can provide a high degree of personalisation that will dramatically enhance the client experience.

Overall, managers should have high expectations. They should look for the capabilities outlined above but also expect that the partner will bring creative and strategic thinking to their fund. In a fast-changing world, it’s important to partner with a provider who can stay ahead of trends and developments and provide leadership on using CFT as a strong differentiator.