Supporting diverse asset classes, improving NAV automation and the role of new technologies such as blockchain and artificial intelligence were among the key themes discussed at our latest fund administration strategy workshop, held in a sunny Dublin on 22 May.
The event—entitled Ireland: Fund Administration Challenges and Trends 2018—was an opportunity for representatives from many of Ireland’s premier fund administrators to take part in a range of panel and roundtable discussions on the biggest issues facing their firms and the wider industry.
Panel hot topics
The panel session, moderated by Lorna Daly from leading Irish law firm McCann FitzGerald, saw Eric Champ from BNY Mellon, Alan Keating of MUFG Investor Services, Keith Staunton from JPMorgan and SS&C Advent’s Paul Bebber engage in a broad-based discussion of the main industry developments and flashpoints.
- Private equity and illiquid assets
One of the biggest challenges highlighted by the panel was the need for fund administrators to efficiently support multiple asset classes, and in particular private equity and illiquid assets.
The problem for many firms is they still run multiple systems for the different funds and assets they administer. And all too often, these legacy systems do not easily interoperate with the administrator’s other platforms, or accommodate the latest structures and funds.
Rationalisation of systems and vendors has been an industry goal for years. Yet the infrastructure hooks and dependencies that have evolved make it hard to switch off old systems and move to a more integrated environment. At some point though, a consolidation programme to get rid of these multiple systems and improve operational efficiencies will be necessary.
- Hands-free NAV
As the panel noted, one major aspiration is to reach a point where administrators can generate a “hands-free NAV,” with a fully-automated NAV cycle and process.
Across the industry that ambition remains elusive. Instead, producing an NAV at the moment involves multiple, often manual, steps before it can be published and reports sent to the fund manager clients.
Like the panel, our goal at SS&C Advent is to realise that vision by continuing to build software that helps industry participants automate as many stages in the NAV process as possible.
Brexit’s impact on the Irish funds industry was also flagged. EU rules mean each UCITS and AIF must appoint an EEA-domiciled management company (ManCo). With Brexit looming, an uptick in activity in Ireland-based ManCos and Super ManCos is already evident.
- Blockchain, AI, big data and technology priorities
New technologies were another topic of discussion. Yet while these cutting-edge developments offer some interesting potential, there was a tempering of excitement.
Instead, the panel raised the point that fund administrators have more current-day, business-as-usual challenges they would be better served tackling first. The emphasis, therefore, should be on pragmatic ways to pick the lowest hanging fruit.
Where are those fruit? Automating existing manual processes, especially through improved workflow and exception management, is an obvious target.
So too is better data management. With the majority of data firms hold created in the last three years, and the amount growing exponentially all the time, there is an urgent need for fund administrators to get a better grasp on the data they are responsible for right now—whether it’s for NAV production, regulatory reporting, management information or some other activity.
The panel noted that, at some point, distributed ledger technology in particular has the potential to alleviate some of these issues, not least by removing many of the current requirements for data reconciliation. But the viability of the technologies is not there yet.
Pooling ideas at the roundtables
The roundtable discussions that followed were then a chance for attendees to engage with us and network with their peers more widely on a range of key topics. These spanned:
- Fund accounting and the middle office
- Technology deployment and integration
- Private equity/closed end funds and illiquid assets
- Shareholder servicing
- The future roadmap for SS&C Advent Geneva platform
The success of these roundtables shows there is a real appetite within the industry to share knowledge and information with each other … something we are keen to encourage and further facilitate in our future events.