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For investment managers, “performance” is most often synonymous with investment performance. It’s usually how they promote and market themselves and how their value is perceived. But true firm performance is comprised of a variety of elements beyond investment performance, and includes operational efficiency, client service, and new business development, among others. In the past investment performance alone may have been enough to sustain business, but today the most profitable managers take a more holistic view of firm performance, inspecting all elements of their business under a microscope to improve efficiency and effectiveness. In this environment, operational performance is coming to the forefront not only for its functionality – how effectively a manager’s core capabilities are supported by operations work that is transparent to its front office – but also because it can be a true business value driver considering significant advances that have been made in the financial technology arena.
Technology is pervasive in our modern world and it has had a tremendous impact on efficiency in both our personal and professional lives. This can certainly be seen in investment management – trade execution that used to require personal connections and negotiations can now be accomplished by an algorithm; trade services and custodian communications that used to take days now takes mere minutes; client reporting that used to eat up hours of the day is now often created at the push of a button and read on a smart phone.
However, at the core of many investment management operations is a web of antiquated technology that has not participated in the “efficiency revolution” that technology advancements have provided in other areas. While there are many newer technology applications and systems on the market that are intuitive, nimble, and cost-effective, their adoption has been slow with delays often caused by perception alone. Four common misperceptions that create barriers to technology improvement are:
The current environment of market volatility, increasing complexity and expanded regulatory scrutiny is putting a spotlight on operational shortcomings. It is more critical than ever that investment managers shed their misperceptions and honestly assess opportunities for operational improvement. When considering adopting and onboarding new technology, operations professionals should evaluate the following areas:
Enterprise solutions are now available as web-delivered technology, elevating the efficiency of operational performance. With barriers to efficiency removed, investment managers are challenged to identify which changes will make the greatest impact and – more importantly – how to evaluate when the time is right for meaningful change. Those who have considered the areas of Perspective, Advantage, and Agility are impacting their firm performance and surpassing others who are hesitant to change, adapt and grow.