12 February 2025

For an industry built on service, the funds industry should know by now that it needs easy to access and deploy technologies that are available today. Given some existing solutions are proven to deliver 40%+ operating savings, firms shouldn’t spend too much of their time searching for solutions that might be delivered in 5-10 years. Chris Biddick, Managing Director, Transfer Agency, Bravura, discusses how firms should be looking for ways to turbo-charge internal and external connectivity without radically reshaping their back-offices.

Despite huge investment in technology, it’s no secret that the world of financial services suffers from what could – in polite circles at least – be termed a fragmented infrastructure.

There is a mish-mash of product silos, settlement cycles and message media and formats, not to mention a continued widespread reliance on faxes in a number of markets, which seems extraordinary to outsiders.

The rush to move services online during the pandemic only served to deepen this ever-growing chasm of technological complexity. Advisers, fund managers and asset servicers all quickly implemented solutions to allow them to operate when human interaction was limited, mainly through a series of patchwork updates (think sticky tape). This, combined with the increasingly widespread adoption of online D2C platforms and other macroeconomic factors led to millions of new investors entering the market.

This explosion of investors¹ – accompanied by a boom in collectibles, NFTs, crypto trading and liquidity and investment options – was initially widely welcomed by the industry. But it also created a more competitive market, with fees, charges and service levels all facing pressure, whilst complexity and cost continue to add up – reducing value for the end investor.

It’s clear the pandemic was a catalyst that changed the world of investing forever, but a key question remains. How can firms regain control and reduce fees, while still providing an exceptional client service in the face of growing operational and technological complexity?

Client expectations are rising

Improved client service is now the top driver for automation across the industry, according to research² (the second is operational cost reduction). Perhaps that should not surprise. The gulf between the average client experience in the funds industry and the near-instant gratification offered through banking or share-dealing apps (never mind mainstream e-commerce websites backed by same-day delivery) is a wide one. There is a new generation of investors coming through for whom the ‘always on’ tech-led world is their native space.

Clients expect more – not just immediacy and simplicity but a degree of personalisation, too. That can only come from good data management (knowing all you can about your clients) and further automation at scale. It is worth noting that the same technologies that deliver greater efficiencies also pave the way to a tuned-up client service approach.

Making the data work

One of the keys to better client servicing is effective management of data. In many firms, there is a profusion of legacy systems that impose complexity on what should be straightforward processes. They may offer rich functionality, but they are a block to further automation and they get in the way of efficient data reporting and management. Scrapping them and starting anew is often beyond the scope of the annual IT budget.

Increasingly, there are workarounds. There are orchestration applications that will connect every process, irrespective of the underlying technology, and manage workflows around different tasks, systems and teams to deliver an optimised process. They create a business-wide architecture spanning new and legacy systems alike. That can also result in more efficient data reporting and harvesting. But it must then be used effectively within a clear-cut client service strategy.

Market growth

Improved client service comes with winning new business, but it can be a mixed blessing if it requires increased back-office headcount. This is where automation steps in. Used correctly, business process automation is becoming a crucial lever for businesses to pull on to lift the overall efficiency of the financial services industry.

Automating functions such as order routing and settlements not only takes out cost but mitigates risk by minimising errors. But, gradually more firms are realising that to get the best out of automation it needs to begin with improved connectivity at the start of the trade cycle and better client service at the back end.

The benefits of doing so are sizeable. Not only can automation facilitate real-time data sharing to personalise services, improve accessibility and enable fund managers to make more informed smarter investment decisions. But it can also make large-scale efficiency gains, decrease risk and reduce time spent on administrative tasks and manual intervention. We recently worked with a major tier one international bank to use their data to remap their internal processes, which dramatically cut processing times by a game-changing 40%.

Connectivity remains a big issue. Asset managers and distributors can find themselves forced to use a variety of fund networks to meet the needs of different investors and specific services. Firms often struggle with integrating disparate network infrastructure, often with different messaging formats. This complexity leads to inefficiencies, data silos and the risk of human errors. The challenge is to achieve seamless interoperability across diverse systems while maintaining high standards of data integrity and transaction accuracy.

Creating the network of networks

Clearly, what the market has been crying out for is a ‘network of networks’ that will encompass the entire market, connect seamlessly to all the different fund networks, their trading counterparties and transfer agents, and translate any message into the user’s chosen format.

This type of technology is already widely adopted throughout the wealth value chain. As the UK and EU continue to press ahead with the transition to T+1 in the coming years, we can expect to see market connectivity and automation take centre-stage when firms look to derisk, reduce costs and build efficiencies across their networks. This will also eliminate operational friction and free up resources that can be redirected towards client servicing.

And as the industry continues to navigate this new world of investing, the big winners will be the ones that look to use the tech at their disposal to drive value to the end investor. Workflow orchestration, combined with enhanced connectivity and a relentless focus on client service, will set firms up for success both now and in the future.

¹ – https://www.jpmorganchase.com/institute/all-topics/financial-health-wealth-creation/retail-risk-investors-portfolios-during-the-pandemic

² – https://www.calastone.com/insights/global-fund-automation-caught-between-future-and-past/