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A lack of automation is holding back the asset management industry, with many still relying on antiquated technology to carry out their jobs. Surprisingly, almost two-thirds (62%) of UK asset managers still use fax machines, according to Investment Week.
Despite global advances in digital technology, asset management is lagging behind. Manual processes make it hard to keep up with the fast pace of change in this volatile industry. Without digitization and automation, asset managers and investors are not operating efficiently and opening themselves up to risk and increased costs. So, how can investors optimize their operations with process automation?
Traditional methods of asset management can hinder day to day business processes and back-office operations, leading asset managers to face a variety of challenges in the ever-evolving financial landscape, including:
Paper-based documents: A problem that is by no means exclusive to asset and fund managers, relying on paper to manage work poses a challenge as it makes it hard to see work in flight, limits visibility, hinders productivity and slows down processes.
Disconnected data: When information is held in multiple databases, it’s hard to have a comprehensive view of portfolios or real-time insights. It takes time to gather data which can lead to delayed decision-making. This can have significant impacts when investments are dependent on timely cash movements. Transferring information between systems leaves room for error when gathering and processing data. Additionally, disconnected data poses scalability issues because as firms grow, the more data they must manage, the more challenging it becomes.
Inability to visualize data: Not being able to visualize raw, disparate data can hinder asset managers as it’s harder to analyze large datasets and difficult to monitor portfolio performance. Without visual representation of data, it’s difficult and takes managers much longer to understand trends and identify patterns in their portfolios, which can lead to missed investment opportunities and makes it harder to report back to clients.
Lack of traceability and responsibility: When work is carried out without an automated workflow, it can be hard to oversee work-in-flight. To effectively manage clients’ portfolios, it’s important to have visibility over who is responsible for the various steps in the case and easily identify bottlenecks so they can be rectified and avoided.
Poor auditability: Lack of transparency can also present an issue of auditability. Asset managers are heavily scrutinized by third party regulators and need to provide various audits to prove compliance, which is challenging when there is no clear process.
Regulatory compliance: Operational risk is higher when not relying on automated business processes. It is harder to ensure compliance and perform risk assessment. Processes such as KYC, fraud detection and other regulatory checks need to be carried out.
Cash movement: Fund transfers is one of the most critical and highly risk-associated processes that financial services firms carry out. You can automate important risk mitigation steps within the process, including client acceptance, four eye review, stock reviews and auditing,
Automated email ingestion: Investors and clients often designate work via email, but this limits management transparency and takes time transferring information over into the appropriate systems. Automating information capture and transfer from emails provides transparency from the very beginning of a process and accelerates the time it takes to complete customer requests.
Capital activity: The ability to raise and deploy capital effectively is one of the most crucial elements of asset management, allowing investors to subscribe, redeem or make transfers as part of their investment strategy. Each of these actions requires appropriate information capture from supporting documents, and the more promptly it can be done, the better, to respond to ever-changing markets. Connecting databases and systems to create a central repository and automating workflows within the capital activity process helps to provide efficiency and transparency. Automation aids portfolio rebalancing, and algorithmic trading to analyze market conditions and can create custom reports and for clients and stakeholders
Net asset value accounting: NAV reports give clients an overview of their portfolio, but gathering and verifying the information can be difficult when dealing with disparate data sources. By mapping and automating the NAV workflow in Bizagi, managers can increase quality, reduce risk, and promote transparency thanks to the ability to seamlessly attach and attest documents. Additionally, automated reminders to senior members of staff speed up the process by prompting them to to review the documents before they are sent to clients.
Asset transitions: When a client raises a request, the transition team need to build a project plan and manually execute the process. There are a multitude of slow and repetitive tasks involved in this process, which is costly and slow and inefficient processes can result in unsatisfied customers and even customer churn. Automating these tasks improves efficiency and helps to move assets sooner.
Client mandate change: When clients request changed to me made to their investments or profiles, multiple teams are involved in the process to ensure the request is correctly registered and recorded with new financial benchmarks created, legally reviewed and then all changes implemented by all downstream groups. Automating the process and visualizing the data shows the status of each change, who is designated to each action and the timeline for each task, facilitating timely implementation of client changes.
Insight Investment, an award-winning global asset management company, owned by BNY Mellon, develops highly bespoke investment solutions for its institutional clients. Due to the sophisticated nature of its business, Insight wanted to optimise transparency around its end-to-end business processes and facilitate process improvements, while maintaining a strong control environment and ensuring a high degree of business agility to continue its successful business growth.
Insight created a multi-skilled and dual-location process engineering team, with a remit to discover, document and digitize business processes. Tableau dashboards were built to visualize the data stored in Bizagi applications, facilitating process management and providing a rich seam of data for further process improvement. Bizagi is providing an integrating framework, knitting together business teams involved in end-to-end processes, and allowing these processes to be stitched together in flexible and coordinated ways.
Automation can significantly benefit financial asset management in various ways, streamlining processes, reducing costs, and improving overall efficiency.
Data-driven decision making: Having the ability to see and visualize data helps asset managers to make informed, real-time decisions. Intelligent automation can also enable predictive analytics through machine learning to identify patterns in historical data to give an even deeper understanding of their information. Timely and data-informed decisions help to make optimum investment decisions and make the most of key investment opportunities.
Improved productivity and work allocation: When work is automatically passed off between teams and properly distributed, they can work more efficiently. Automated workflows give managers a high-level view of all cases and allow them to see teams’ work in real-time, so they can reallocate work if some teams are overloaded and not able to meet their deadlines.
Enhanced reporting and communication: Automation can generate custom reports for stakeholders, providing transparency and clarity, with data that can be acted upon to make continuous improvements. Data visualizations enabled by automation help to create comprehensive reports for clients and make it easy for them to understand the status of their portfolio. Automated notifications also enhance communication to both stakeholders and clients, keeping all relevant partied informed on the status of portfolios.
Adaptability and agility: Mapping out business processes ready for automation provides the flexibility to modify them end-to-end, enabling firms to be nimble in the face of change, whether that be changing market conditions, or amends to regulatory rules and regulations.
Ensured compliance: Automating processes ensures that investment strategies comply with financial regulations, with automated audit trail documents providing a clear record all tasks completed within the process.
Growth and scalability: Automation provides more effective control and efficiency in end-to-end processes, and enables organizations continue growing by being able to effectively handle increasing volumes of data and manage more customer portfolios while still delivering effective customer service.
Enhanced client experience: Automated processes will provide faster, more accurate transactions, which will enhance customer satisfaction. Additionally, the transparency and improved communication enabled by automated processes help to provide up-to-date information, which today’s digitally-savvy customers expect.
The largest private hedge fund manager in the US, Stone Coast Fund Services was looking to digitize and automate its business processes for better operational efficiency. They handle multi-million-dollar cash transfers daily and needed visibility and auditability over transactions and operations of $100 billion in assets under management. Up until 2016, their transactional cases were carried out over email or on paper which made it hard to see work in-flight.
Stone Coast deployed their first process in Bizagi in just six weeks, and over the course of seven years have scaled the platform to create workflows for 80 core business processes. Bizagi is now used by every department in the organization and has become their second most critical application behind their core fund accounting system.
Learn more about Stone Coast Fund Service’s automation journey in their webinar, Banking & Investment Operations Reimagined: Stone Coast Fund Services' Digital Transformation Journey with Bizagi.
Read about Bizagi’s investment automation solutions.
Download our free eBook, 3 Key Strategies for Modernizing Investment management Operations.
