Digital transformation has meanwhile reached the private capital industry. Automated data capture, centralized data storage, customized reports, and integrated workflows are absolutely essential for conducting efficient operations. That is the main finding of the study carried out by AssetMetrix in Q1/2017. In the course of the study, over 100 customers and market participants were surveyed to find out more about how they organize their back- and middle-office activities and the systems they deploy.
Falling rates of return, greater transparency, and easier access for all market participants as well as increasing reporting requirements are putting investors under pressure and calling established business models into question. Limited Partners (LPs) and General Partners (GPs) now need to adopt more rigorous cost controlling procedures and strive for greater efficiency, particularly in their back- and middle-office activities.
These days, most private capital investors have access to conventional market databases. For the administration of their funds and investment vehicles they either use accounting software or outsource these tasks to external partner companies. In most cases, however, market databases and software solutions remain isolated from one another, despite the stringent interconnecting of data, information, and workflows in one single system providing the greatest leverage for boosting efficiency and minimizing costs.
Through the use of their integrated digital platforms, cutting-edge asset servicers offer capital investors the opportunity to optimally position their own business model for the future and undergo digital transformation practically overnight by means of selective outsourcing. The painstaking in-house process of remodeling one’s own processes and systems is therefore no longer necessary.
Rigorous digitalization and the optimization of workflows and reports offer immense potential for reducing the workload on available resources. Here, AssetMetrix sees the opportunity for LPs to cut their costs for systems, human resources, and other expenses by around 35%, depending on the individual situation. Institutional investors, who are often badly understaffed, can therefore release valuable human resources from manual and administrative tasks and deploy them more profitably. For GPs too, AssetMetrix sees the potential for optimization as high as 25% – particularly in the areas of data exchange, monitoring, reporting, and fund administration.