SS&C GlobeOp manager director Ron Tannenbaum said there will be only 10 fund administrators left in the industry in a few years time. Speaking on a panel at the Linedata Exchange London event yesterday, the industry veteran noted that the increased regulatory burden on fund administrators and their clients is placing pressure on revenue, fees and costs and only providers with the scale and ability to invest will survive. “In fact there is more likely to be even fewer than 10 fund administrators,” said Tannenbaum.
A fund administration panel also provided an insight of the key concerns of the industry’s participants.
Steve Edkins, CEO, FusionExperience said regulation and data management are top priorities for his firm, which provides technology and data management solutions to the financial services sector. “We try to take as much out of the costs out of doing business for our clients, who outsource without loosing too much control,” he said.
Niall Brooks, managing director, Castlegate Investment Services in Malta agreed that data management is of critical importance to his fund administration business. “Taking the costs out of data management and price feeds, thereby ensuring transparency amidst the regulatory challenges is important,” he said.
“With the advent of Solvency 2 in particular it’s not just about hiring people it’s about sitting down with the compliance officer and understanding and interpreting exactly what those challenges are.”
Mark Giancola, finance & operations director, Investments, Canada Life Investments agreed that outsourcing only certain costs to the fund administrator, while retaining some control, is the way forward for his firm.
Brian Tierney, business analyst, HCL Insurance BPO Services agreed with Brooks that a good compliance manager, who is fully accountable, is essential for buyside firms.
The panelists also commented on what they thought the fund administrator of the future would look like, given the regulatory challenges facing them.
Tierney said: “The fund administrator of the future is likely to use cloud computing. It will also pay more attention to exceptions in reporting, rather than spending more time analyzing entire reports presented to them. I see smarter working – it will be a case of better technology that is able to determine the exceptions that need checking and verifying.”
Giancola adds: “We don’t outsource. We want to hold one to certain things and we’ve spent a lot time consolidating our European locations. We have thought about taking on third party business but we think that leaner and meaner is best. I also think the back office space is becoming more relevant and interesting and is seen as professional services rather than back office services. Our image is changing, we are forward thinking, we need greater skills and we need to use our existing systems to the best effect. In the future leaner and meaner will be the way to go.”
-Janet Du Chenne