Evolving technology in Private Capital
As part of the 2020 Global Private Equity & Venture Capital Report, AssetMetrix’ Chief Technology Officer, Dr. Dimitris Matalliotakis, shared his view on digitalization in private markets and key motivations driving fund managers to adopt new processes.
In order to find out how technology has evolved since then, AssetMetrix has decided to re-interview Dimitris.
2021 has been a very interesting year in terms of technology adoption. There is no question any longer about when to invest in technology in the industry, I think everybody understands that we need to invest now and not in a couple of years. This has been strengthened by the pandemic indeed and it made obvious the capabilities and the necessities of technology in certain areas, in particular if everybody is working from home.
In the areas of more fundamental systems and data processing systems the boost coming from the pandemic was more of an indirect nature. It showed that while everybody is working from home you need an even more secure and stable system, more automation in order to deliver what has been delivered in groups working together in a secure environment.
The biggest challenge I believe is truly the lack of standards in data exchange and data harmonization. This makes interoperability of systems highly challenging and this is both reducing the return on investment on technology and also inhibiting some organizations from adopting technology at the pace that would have been required. So this is certainly something that needs to improve in the next years. The second factor is related to the success of the industry. We have a very successful industry that is growing rapidly at the moment. At the same time we are trying to close a huge technology gap in this growing phase which requires time and resources that are not available right now. So, time and resources – human resources – are a major inhibiting factor to adopt technology faster.
We see the solid requirement of stable, reliable, regulatory compliant systems for data management increase transparency of the data through portals. What we have noticed picking up within the last couple of years is indeed demand for ESG technology. ESG functionality is based on existing modules but it needs enhancements that have been put in the market. There is also a very high demand for data extraction automation based on machine learning AI (artificial intelligence).
I strongly believe a major factor in the next 2-3 years is everything we will see advancing in the areas of machine learning and artificial intelligence. This will be relating to very specific use cases that we have in the industry. The primary being the automation of data extraction – unstructured data coming both from documents but also from the web and being able not only to extract the data but to harmonize and categorize it in such a way that it can be processed by machines subsequently. This is something that I strongly believe will dominate in the next years. A driver for that will be ESG, forcing us to accelerate technological adoption.
As you can imagine, we have a full pipeline and we are becoming more and more technological as a company and the industry is doing so as well. Automation is at the top of everything that we are doing. So we will strongly focus on automated data extraction and will enhance our already award-winning ESG module, combined with new data extraction automation capabilities. This will be machine learning AI-based obviously.
What distinguishes and differentiates us in our ambition to do aforementioned, is not only harvest the cost efficiencies by using automation in that area of data capture but at the same time upholding and improving the quality of the data points that are being captured and extracted. This is a major challenge in the industry today. Why? Because technologies, data extraction and machine learning are not perfect, and will not be for a while. We have seen a lot of players investing purely into technology, not looking at the processes or the additional potential of human factor that needs to play a role there and that is essential for us.
AssetMetrix intends to bring technology to our clients in such a way that it delivers the maximum quality in data and usability that we believe is required for what we are doing. So that is one of the things on our road map. Additionally, we will be moving our portals, our reporting and digital platforms, to a more real time data computation. Also, we will move to more interactive advanced analytics with simulations, stress tests and program planning. All of these, of course, on a more intuitive digital platform. We will refresh the usability and user experience of that platform at the same time to bring out a top-notch digital environment. Our goal is for people to use the platform because it delivers value AND it is easy to use.
Want to learn more about specific technological challenges in private capital?
For more information on the topic of technology in private equity, also read this article
As part of the BAI Anniversary Brochure 2022, AssetMetrix’ CTO shares insights on the topic of technology transformation in private equity and looks at how fund managers and investors can turn challenges into opportunities.