CTOs are looking for a partnership with technology vendors who bring a holistic approach to solving problems and not a "point solution" that lacks alignment with their overall strategy and operating model.
This Q&A is from FundFire's February 2023 webinar featuring Chief Technology Officer panelists from three well known asset managers, along with Linedata’s Head of Product, discussing key challenges and how technology vendors are helping to solve them.
- Karl Sprules, Head of Global Technology and Operations, AllianceBernstein
- Henrique Francisco, CTO, PineBridge Investments
- Chris Herringshaw, CTO, Janus Henderson
- Philitsa Hanson, Global Head of Product, Linedata
New technologies offer many things to asset managers, from options to optimize and create efficiencies, to tools to keep from drowning in data and the regulatory tide. Ultimately, all asset managers are looking to gain a competitive edge and are hoping their tech vendors can help.
What challenges are asset managers facing in their business today?
Karl / AB: In today’s environment, it is difficult to find strong technology talent that can help solve the toughest business problems.
Henrique / PineBridge: Having a combination of different vendor systems can be difficult. PineBridge has both new and old businesses that it is looking to grow, so leveraging technology to streamline processes in order to build scale is essential. Data management and building a more unified platform across multiple vendors are also major challenges.
Chris / Janus Henderson: Data issues are a big challenge because platforms tend to want to offer data in their own silo, making it complex for asset managers to then stitch together a cohesive data model. Whereas, in the past, when we controlled all of the systems, it was much easier for us to pull together a data platform as well as report on and do analytics. Another challenge is the new hybrid working model and optimizing asset managers’ service.
Philitsa / Linedata: We’re hearing from our clients that they’re looking to modernize their user experience by increasing automation to eliminate repetitive work and utilize more prediction-based workflows. Clients want to understand where they need to pay attention to their operations and prevent the need to have lots of people doing work that doesn’t add a lot of value.
How are technology providers helping to solve challenges at your firm?
Karl: Our developers have started using the sort of GPT-based code to develop plugins and create large pieces of code extremely quickly. These tools allow development productivity to go up dramatically, as you must do a lot more with less people.
Henrique: Technology is an evolution, not a revolution. It’s about the speed at which you can develop new things and partner with vendors to get capabilities to users much faster.
Chris: We’re inundated at all levels of our organization with tech vendors who have point solutions. The issue is when vendors haven’t really put thought into who they’re going to partner with and how that applies to an asset manager in totality. This creates almost twice as much work for us, as we have to explain how we work and understand how it applies to their platform.
How are asset managers using technology to solve these challenges?
Philitsa: Firstly, asset managers are helping solve the people problem by utilizing tools that use business intelligence and workflow automation to streamline their workflows. AI and ML tools can help predict when things are going to go wrong, rather than just being reactive to things that already went wrong. Secondly, being API driven is essential. Our philosophy is that clients should be able to integrate our software with other software seamlessly, be independently updated and still interact with each other.
What qualities do you look for in a technology vendor?
Chris: Vendors that come in and really offer a more cohesive experience rather than a point solution. Otherwise it exacerbates silos and that (vendor) may or may not have its own thoughts on data that don’t necessarily align with how we operate or how our other vendors are operating. We’re looking for that simplification of vendors that are working together that have a strategy even if it’s a multi-vendor partnership.
Henrique: If data isn’t accurate, it doesn’t matter how great the application is, people won’t use it. Thus, the ease of integration from a data perspective between vendor systems is critical, especially when there are multiple different systems from different vendors.
Karl: We look for a partnership from vendors, the firms that really want to understand how our process works and almost feel a sense of ownership for helping solve the problem. Technology vendors that have a coherent vision and think through details like how they want to present to the client and the partners that they work best with tend to bring the best solutions.
What should COOs be looking for in tech vendors to help them deal with the challenges they’re facing now?
Henrique: Finding the vendor that can honestly help with your needs rather than trying to push something you don’t need is definitely important. Additionally, looking at their technology stack and how it has evolved, or how it is going to evolve in the future. A good understanding of roadmaps is also critical.
Karl: As more and more data platforms are becoming cloud-based, the ability to integrate is very important. Tech vendors also need to have strong financials and be confident enough in their security posture to be able to share that and how it’s evolving.
Philitsa: Vendors need to be able to adapt as quickly as possible to changing market needs and changing demands from their user base. Finding the right technology vendor needs to match what extensibility means for your organization.
Chris: Think about how technology can help with the operating model of the business. Double down on the notion of enterprise and business architecture, and really purposefully design how you want to operate.
Outsourced partnerships can work in concert with internal solution, particularly as firms implement new cloud-based strategies. How do you decide what to outsource and what to build internally?
Philitsa: The question of whether to outsource your technology has many different facets. There’s the building of the technology stack, the maintenance of the technology stack, and the modernization of the technology stack.
Karl: Firstly, we look at if this is something that can help get an edge in our business or if it is a commodity that is needed. Also ask yourself if you can influence that business impact by building it yourself. If the answer is no, then buy it, if the answer is yes, build it internally.
Henrique: There is no simple answer, it depends on many factors including your own history, how you evolved as a technology organization, and how you will make those decisions. It is also extremely important to make sure that you have an overarching technology strategy for your organization to ensure the solution is one that fits with your strategy.
What are the biggest trends in technology right now?
Philitsa: In many ways, technology service providers are advancing the capabilities they offer to the asset management industry. We’re going to see an increase in demand for automation and the use of predictive analytics, and that’s going to expand far greater into investment operations than we are seeing now.
Chris: Applying machine learning to different areas of finance has always been one of our goals, but it’s tricky to do effective AI and ML, as you need to have a great set of foundational questions. Additionally, a big trend this year will be the transfer of data and event-driven, real-time communication between vendors.
Looking forward five to ten years, how will technology shape the future of asset management?
Karl: Base case, it just continues to improve along the same timeline in terms of operational efficiency and the speed at which decisions can be made. There is also a chance for more extreme outcomes especially when it comes to the capabilities of large language models such as ChatGPT.
Chris: What first comes to mind is personalization and giving institutional and retail clients a custom experience. So, I think we’ll see more vendors that have the flexibility to pull different systems together and offer what feels like a custom experience.
Philitsa: If you think about all of the data that asset managers have access to today, that amount will grow exponentially five to ten years in the future. They are going to be able to use that data to make better decisions for their clients and build those personalized services. The use of AI and machine learning tools will help asset managers predict and identify trends in the market much faster than they do now and make more accurate predictions about future performance. View the webinar replay To view the full webinar replay click here and get the full benefit of this in-depth discussion.
View the webinar replay
To view the full webinar replay click here and get the full benefit of this in-depth discussion.
Learn more about Linedata’s technology solutions for asset managers:
- Linedata Asset Management Platform
- Linedata OMS & Trading
- Linedata Compliance
- Linedata NAV Solution
- Linedata Analytics Service
About Philitsa Hanson, Global head of product at Linedata
Philitsa Hanson is the Global Head of Product for Linedata Asset Management. During her 18-year tenure at Linedata, Philitsa has worked closely with various types of asset managers including institutional investors, private wealth managers, and hedge funds to enhance their operations.