Growing the asset management business puts operating model change in primary focus.
Given the pace of business and technology change, as well as more demanding customers, a new operating model needs to enable both innovation and strategic agility. The new model should also address every core capability across the enterprise—distribution, middle and back office; by focusing on three things:
Redesigning middle and back office functions using emerging technologies. For example, distributed ledger technology (DLT) is making the industry goal of real-time, trade date settlement an attainable reality by creating a direct, transparent and secure transaction model between custodians and counterparties.
Establishing a strong data foundation—one that promotes trustworthy, clean data and a strong governance structure—which could allow firms to leverage analytics engines within accounting operations.
Addressing operational and skillset gaps in the workforce to balance current resource needs with the demands of the future, which will require an active and flexible workforce strategy.
Although back office functions are essential to ensuring the delivery of accurate data, calculating net asset values and fulfilling regulatory requirements, they drive a large share of costs, with (traditionally) a low amount of value-added activity. That means that asset managers should be working toward higher-tech and less costly back office operations.
Advanced technology can revolutionize end-to-end back office processes. For example:
Custody: Innovation is pronounced in the custody world, and DLT will be a primary player; disrupting numerous aspects of the trade lifecycle.
Reconciliations: Leveraging intelligent automation and analytics allows talent to focus on resolving breaks with the highest risk and front-running transactions with predictive modeling.
Valuations: New technologies and analytics to supplement the core infrastructure can improve a company’s risk profile and control framework.
Across every core function of the enterprise lies an opportunity to transform the way that operations are analyzed and directed.
The aggregation of data, coupled with digital intelligence, introduces new methods of support in the middle office. Consider how reimagining the investment management support model and marrying data strategy to digital capabilities can affect middle office functions such as:
Investment Book of Record (IBOR): Analytics can be used to provide an enterprise view across all markets, products and global trading desks.
Trade support: DLT may eliminate the need for matching trades to brokers and/or counterparties.
Collateral management: Advanced technology capabilities such as DLT, automation and analytics have the potential to strengthen the collateral management function.
Corporate actions: DLT will enable a faster, more accurate flow of information to investment managers following corporate action event announcements.
Investment management: Artificial intelligence (AI) and analytics will continue to enhance the investment decision process.
Direct your data’s future with a strong foundation
A critical component to enabling the optimal future operating model is an effective enterprise data management strategy. A strong data foundation—one that promotes trustworthy, clean data and strong governance—drives the effectiveness of emerging technologies and is a critical factor in unlocking scalability.
To begin, asset managers should perform a critical assessment of where they fall along the transformational journey, and whether the foundational data strategy elements are in place to support the revolutionized operating model.
Accenture's five-step model to becoming a data-driven enterprise can help companies move from a siloed, "single-use" approach, in which data is tightly coupled to certain schemes and formats, to an ultimate stage of concentrating a single source of trusted data in a centralized solution.
Talent and organizational culture
The workforce of the future asset management firm must support a more dynamic, digital operating model. This means asset managers will need their people to be flexible, deeply knowledgeable and service-oriented.
The shift to a hybrid, "human + machine" environment introduces new jobs and skills, especially for data analysis and oversight. New roles include: change leaders, data scientists and operational analysts.
Move fast to thrive
Asset managers that design their operating models to have differentiating flexibility are likely to thrive as we enter a new age of transformation. The following practical steps should be top of mind for firms as they consider their current and target operating model.
First, examine your infrastructure to understand how flexible your current environment is and identify opportunities to achieve scale. Next, assess your data foundation as clean, fit-for-purpose data is key for all future-proof technology solutions.
An overhaul of your talent roadmap may also be in order as the way you recruit should align with how your organization will operationally transform. Next, define your transformational change strategy to ensure your employees are willing to embrace the shifts required to achieve a new way of operating.
And last, effective change management programs should be woven into your approach for implementing the target transformational model.