How Fund Administrators Know It’s Time for a New Data Solution

Fund managers are professionals at knowing when to buy and sell. Yet the question of when to invest in new data solutions continues to perplex some fund executives and their teams.

It can be hard to quantify the value of a deep-learning data warehouse, or a smart digital system that feed real-time information throughout your organization. These new technologies represent major operational changes in an industry inclined toward the status quo.

But the question for fund administrators is not “Should we invest in new data solutions?” but rather “When — and which one?” For smart companies, the answer to the latter question is “As soon as possible.”

The COVID-19 pandemic dramatically accelerated the digital differentiation in the financial services sector. In banking, for branches closed as consumers turned to banking apps. Similarly, online payments — including through virtual wallets and credit cards — took off in sectors that continued operating through the pandemic.

If fund managers think they are immune from these changes, they should think again. Many investors are already clamoring for faster and more transparent mechanisms to monitor their investments. They often want forecasts of financial performance along with insights into the social and environmental impacts of their investments. In order to deliver on these increasingly complex demands — and of course to outpace the competition on financial performance — fund managers need to get shopping for new data solutions.

Here are a few scenarios that signal when it’s the right time to make the digital leap:

• Your firm is feeling the pressure from clients to speed up reporting cycles. But your legacy systems can’t pick up the pace.
• Your firm is raising a new fund, leading to fresh conversations about the cost and efficacy of incumbent data solutions.
• A new operations or technology leader has been appointed and is reviewing your firm’s processes and vendors.
• Your firm is looking to grow but struggling to differentiate its services and attract new clients.
• A fund administrator is seeking to scale but must hire/expand personnel to process incoming data.

Beyond the cost of these new solutions, fund managers are also wary of how machine learning might impact workplace culture and morale. You could call this the if-it-ain’t-broke-don’t-fix-it mentality. It’s important for everyone at the company, however, to understand how smart machines don’t replace people. They give people access to more data, empowering them to make better decisions.

Nobody takes pride in their speed at inputting data or aggregating documents — or at least they shouldn’t have to. Assigning these tasks to machines means more time for human employees to put data insights into action, from portfolio management to raising funds and expanding your client pool.

Fortunately, the COVID-19 pandemic has yet to inflict major damage on the financial system. But as we emerge from this crisis, every industry will begin the process of returning its new normal. With digital disruption knocking at the door, fund administrators should be buyers in the market for data innovation.