Automating investment management operations processes takes people, not just IT systems.
That may sound like an off-point message from an investor servicing technology solutions vendor like us. After all, Deep Pool is in the business of developing and selling systems. Our raison d’être lies in providing clients (fund administrators, investment managers and other financial services organisations) with technology applications specifically designed to take on the tasks humans traditionally performed – and do them better.
Maximise automated actions. Minimise manual intervention. That’s the mantra. Yet the importance of skilled staff in delivering that automation often gets overlooked.
Technology can only get you so far
Clearly technology is at the heart of organisations’ automation efforts. Systems alone though won’t deliver the operational results firms seek.
The industry ambition for decades has been to achieve some nirvana state of straight-through processing. Yes, we are getting closer. Systems are becoming more reliable. Their functionality better and more extensive, with developments covering ever greater areas of the client and transaction lifecycle.
Yet the reality is true, 100% STP remains beyond our grasp. Process idiosyncrasies exist. Exceptions arise. Errors occur. System limitations or bugs emerge.
Fixes and workarounds continue to be needed. Without them technology platforms fall down or snarl up.
In untouched, automated processes, data errors can go unflagged, left to sail on through the systems to cause (often undiagnosed) problems downstream. As the old aphorism reminds us, garbage in, garbage out.
Solutions are getting smarter at identifying breaks. But investigating problems, fixing errors, resolving exceptions and unblocking the bottlenecks ultimately takes some degree of manual involvement. Technology may now carry much of the load. Behind the systems though we still need responsive human experts with the necessary industry and technical knowledge to keep those automated flows going.
The talent premium
The bad news is that quality talent is at a premium, exacerbated by the pandemic and ‘Great Resignation’, with wage inflation adding to cost pressures.
The good news for investment managers and fund administrators is responsibility for all that expertise doesn’t need to be kept in-house. The skills onus may have been greater when IT development, installation and maintenance was an internal affair. Today firms have a range of vendor partners available to assume some of that burden.
As the technology’s sophistication has increased, the institutional knowledge required to support the infrastructures has necessarily shifted to IT vendors.
Systems providers have that specialist understanding of the way their platforms work and how to get the best out of them. They can provide system and operational training tailored to users’ needs. They are better equipped to identify and rectify IT-related problems, and craft improvements. Working with multiple clients exposes vendors to common industry challenges and allows them to pool that experience to create effective solutions. They also have an economic incentive to devote staff resources to R&D – at least if they want to be successful in the industry over the long haul.
Plus, with their expertise and dedication to the field, vendors can take on the key person risk surrounding the IT infrastructure that plagues so many managers and administrators. Systems are the vendor’s business. The associated knowledge becomes spread around broader teams, rather than concentrated in one or a handful of people.
Of course, as with any outsourcing relationship, the shift in responsibilities doesn’t make them disappear altogether. Vendors for their part still have to recruit and retain the high calibre staff needed to deliver on clients’ IT demands. But that’s a due diligence discussion for another day.
As many industry participants consistently argue, technology-enabled automation is an increasingly essential component in firms’ success. We agree. Just don’t overlook the human side.
ABOUT DEEP POOL
Deep Pool is the #1 investor servicing and compliance solutions supplier, providing cutting-edge software and consulting services to the world’s leading fund administrators and asset managers. Our flexible solution suite, developed by an experienced team of accountants, business analysts and software engineers, supports offshore and onshore hedge funds, partnerships, private equity vehicles, retail funds and regulated financial firms. Deep Pool is a global organisation with offices in Dublin, Ireland, the United States, the Cayman Islands and Slovakia. For more information, visit: www.deep-pool.com.