What’s The Benefit Of Data-Centered Fund Operations
In the private fund world, it seems we’ve all been working on widgets; on extract, transform and load solutions, and on APIs that allow data to be moved efficiently and securely to gain more efficiency. But when we get into the place where performance really happens, the front office, all of these streams of data are point to point, or worse silo to silo, and no one has properly connected the front, middle and back offices and worked on how data can be self-service and secure to accelerate putting it to maximum effect.
Funds, allocators, and fund administrators are looking for solutions to manage the shift into the new world of fee compression and data transparency. This is costing funds untold sums.
Meanwhile investors are increasingly frustrated by a lack of easy to use technology in the LP journey.
Consider what is happening to the allocator’s world. Deloitte research suggested 70 percent of consumers are likely to use at least one technology for healthcare such as telemedicine and remote patient monitoring. That was before COVID-19. Whereas 72 percent of consumers were using mobile or online banking for personal finance, only 31 percent were paying medical bills online. But that is changing fast. This shift in consumer demand is pushing the healthcare industry to confront how to integrate technology to provide end-to-end customer service. As with other industries, the answer lies with how data is able to flow.
A place for data to call home
Getting data properly organized is key. Funds should aim for flexibility to move among applications based on which services best align with their digital strategy at any given time. Funds have traditionally been fiercely protective of their data. There is a fear that transparency will inevitably lead to commodification — to a race to the bottom on fees. But a better and more accessible presentation of data can help erode bargain hunting.
Funds who rethink their approach to data and start figuring out how to get to a data-centered approach now will not only better serve LPs better, they will build a reputation beyond that with its own value. Forward-thinking funds can better demonstrate a capacity to extract market insight from digital platforms and developing solutions that demonstrate value to LPs. This means learning the tech side, from how to use dashboards and integrate data systems, to helping answer the big questions facing the funds industry, such as how to extract actionable insights from data platforms and differentiate services in a way that’s meaningful to allocators and stakeholders beyond LPs.
But importantly, a data-centered approach gives visibility into trends before they become commonplace, so a fund can develop practices that anticipate demand, rather than simply responding to it. Funds that make themselves digitally agile now will be able to see what’s ahead – and capitalize on it – as others try to catch up.