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Asset management companies and fund administrators face a challenging combination of market volatility, downward pressure on fee revenues, and an increased regulatory compliance burden. All compounded by manual processes and disconnected legacy technology.
IT teams are fighting to meet the demands of the business while keeping the lights on, limiting opportunities for improvement and innovation. This blocks investment managers from unlocking cost savings, increases operational risk, and leaves organizations open to disruption from more agile competitors. So what can be done?
Building a capability or a Center of Excellence around process automation and low-code apps enables asset management companies and fund administrators to:
- Transform day-to-day operations quickly in a repeatable way
- Improve visibility into case management and efficiency bottlenecks
- Create audit trails for crucial compliance processes
- Involve less technical staff in the transformation projects to support IT teams
- Enable business units to manage their own solutions on approved platforms
- Orchestrate data across systems and manage the end-to-end processes
- Innovate on top of legacy systems without ripping them out or replacing them
Numerous vital daily tasks and processes can be automated in investment management. Including but not limited to:
- Document Review - Validations
- Contract Management - Know Your Customer (KYC)
- Valuation - Board reporting
- Instrument Setup - Client Onboarding
- Deal Close - Client Mandate Change
- Cash Transfers - Data valifation
- Fund accounting - Fee tracking & reporting
- Cash Positions - Capital Activity
- Price Action Trading - Risk & Compliance
- Escalations, approvals and exceptions
Automating processes such as these listed above can empower investment managers by ensuring speed and accuracy over data-related tasks, allowing them to focus on a broader range of activities where human expertise and creative thinking can bring more value.
Taking a deeper dive, other aspects of investment banking that can benefit from automation include:
Equities research – When evaluating data to make investment recommendations, researchers and bankers will look at a myriad of information, from financials to industry outlook to predict future company performance and share prices.
Automating the data collecting behind equities research is a huge help, with applications trawling vast amounts of data from multiple sources, cleaning and readying it for analysis. This data can then be used to build, and even automatically update, financial models for equities research, creating complex models and performing scenario analysis that is always based on the most up-to-date information.
Automated algorithms can generate insights and portfolio diversification and identify opportunities for optimization by automating the calculation of performance metrics and risk assessments. Investment bankers can then rest assured they have the right information to make informed decisions on their clients’ investments.
Underwriting – One of the most vital services investment bankers provide, underwriting heavily depends on knowledge that allows banks to make a conscious choice on whether their client is loan or investment-worthy.
Underwriting is fast becoming one of the most popular processes to automate across the banking and lending landscape, thanks to the time and money it saves. The automated data collection and presentation of data in an easily digestible format, often on dashboards that show headline numbers, makes the underwriting process far more efficient and streamlined. Underwriting automation also helps with compliance and risk management when analyzing investment candidates.
Anti-Money Laundering - Anti-Money Laundering (AML) is a vital compliance check in investment banking, with all transactions monitored for any suspicious activities that may point to money laundering. Organizations are legally required to carry out regular and thorough checks on their customers, including Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures.
Automating these processes helps with producing regular reports and automated audit trails and documentation. Banks can submit these to regulatory bodies to prove necessary checks are carried out consistently and show they are actively preventing fraudulent activities taking place on their watch.
These automated AML processes can also integrate with machine learning algorithms, which learn to detect new patterns that indicate money laundering or illegal transactions.
Portfolio Management - Automated portfolio management vastly optimizes a process that involves multiple tedious manual tasks, such as data aggregation and analysis and portfolio rebalancing and reporting.
Automating trade reconciliation can match trades with trade confirmations, account statements, and settlement records, reducing risk and ensuring accurate and compliant reporting that meet investment guidelines and keep clients satisfied.
Risk management within portfolio management is also greatly benefited by applications that can integrate risk analytics and scenario modeling. Automated stress tests and value at risk (VaR) analysis helps to proactively manage risks and make informed decisions on their clients’ portfolios.
Increase capacity without additional headcount: Automating manual processes, such as data entry, report generation and document verification, means more tasks can be completed without human intervention. So, employees can manage more without the worry of being overloaded or making mistakes because the automated applications are doing the bulk of tiresome, administrative work for them. Consequently, the organization can scale without the need for hiring more staff.
Decrease processing times: Investment banking deals with high volumes of information, and even Big Data, some complex data sets that would be incredibly hard for humans to process in a raw, unstructured form. Automating data management processes in investment banking provides speed and accuracy while minimizing the risk of error.
Increase employee satisfaction: It’s no secret that those who work in investment banking work long and grueling hours. Often these hours are filled with labor-intensive tasks, such as aggregating and cleaning disparate data to ready it for analysis. Automating these tedious processes gives employees more time to focus on creative problem-solving and personal interactions with clients, which is more satisfying for them and provides more value to the organization.
Increase client satisfaction: Automation eases pressure on employees to handle routine tasks, they can strengthen their client relationships, which boosts both employee and client satisfaction. Clients can also rest assured knowing that their bankers are backed up by the best technology, helping them to make the best decisions when managing their portfolios or approving their loans. Plus, automated applications can provide 24/7 support for increased availability and faster response times to any customer queries.
Real-World Example: Stone Coast Fund Services, a global top 15 hedge fund administrator automated their complex, paper-based financial transfers movement review, and approval transfers process with Bizagi. Digitizing these critical, cross-functional processes generated valuable new customer and account insights across the organization and its 171 worldwide funds. This new timely execution of fund redemption meant they could meet customer service level agreements and significantly improved their customer satisfaction.
Increase accuracy: Investment bankers handle vast quantities of financial and market data, day in, day out. It’s imperative to ensure the accuracy of information pulled from various sources when it is keyed into multiple databases and spreadsheets. Automation ensures accuracy, which minimizes risk and increases efficiency as data doesn’t need to be reworked later down the line because of a manual error.
Increase compliance: Investment banking is ruled by strict regulatory requirements and risk management protocols. Automation can help by continuously monitoring and analyzing data for compliance violations, fraud detection, and risk assessment. It also ensures data is always taken from reliable sources and helps you establish proper visibility of people, data and processes across your organization to ensure proper conduct across the board.
Streamlined communication & collaboration: Automated applications pull data all into one central place, so everyone involved is looking at the same data (provided they have permission to view certain sensitive information). Information and status updates are also automatically sent to those who need it, so people don’t have to manually chase for updates, sign-offs or clarifications.
Real-World Example: Insight Investment, a global asset management company owned by BNY Mellon, automated processes to deliver visibility and process improvement. They reduced operational risk by guiding staff through complex processes and handing off work reliably. Integrating with Tableau dashboards, enabled them to bring process data to life, showing information such as the current status of each case and who is assigned to each task. Hot case links from the Tableau dashboard take the user directly to the summary form in Bizagi, eliminating the need for manual tracking.
Bizagi has helped numerous organizations to optimize their operations through innovative automation solutions, including multiple banks and financial service providers.
Bizagi can streamline operations in investment management and accelerate innovation using existing IT and business resources, enabling users to create robust enterprise applications with built-in governance.
Find out what we can do for you at https://www.bizagi.com/en/solutions/investments
