Compared to other industries, the technological maturity of ManCos is lower than expected. Today, most tasks performed by ManCos are frequently carried out manually or, at best, using standard office tools. This statement is true for virtually all ManCos regardless of their size (of course, some exceptions do exist… but only to prove the rule). However, if this situation is not addressed soon, this idiosyncrasy may turn into a global failure of the asset management industry.
Let us not be fatalistic though: more and more industry participants are starting to comprehend that investments in technology are necessary, and a better technology-driven future is beginning to take shape.
Let us fast forward 10 years and imagine the technology-enabled future of ManCos. In 2030, ManCo work is expedited by a so-called “ManCo system” and no one can imagine or remember how they did their jobs without it (only the old employees will joke about the time they relied on spreadsheets to run their business). The core of the system is its workflow management and analytics capability. It enables the ingestion of massive amounts of data and documents sourced internally and externally from business partners, such as distributors, fund administrators, transfer agents and other outsourcing partners or delegates. These are all linked together through APIs aiding the exchange of data. The information is then routed through workflow tools to manage the product lifecycle, like an air traffic control system controlling vast amounts of external data while continuously coordinating the actions to be taken.
As such, the ManCo System will be the core enabler of day-to-day operations. Based on the analyzed data, the principal work of ManCo employees will be making decisions and defining the way forward. For example, employees will have a holistic view of all operational and regulatory risks in real time with indications on the next best course of action. Through a powerful CRM tool, employees can also seamlessly ensure optimal interactions with their clients and distributor base. And when it comes to reporting, a universal reporting factory will satisfy the individual and customized information needs of clients and regulators.
So why should we be bothered about ManCoTech if it does not yet exist and is only a vision?
Simply put, here are a few arguments why this IT transformation is a must:
• The amount of data to manage even one fund share class has become huge. Failure to provide quality data may result in the “de-listing” (or bad ratings) of the product by the distributor, wrong investment decisions and eventually regulator fines.
• Regulators will keep piling on new obligations, regarding either responsibilities or reporting. At the same time, the market will keep putting pressure on fees. The only way out from under these circumstances is up, through efficiency and scale.
• One of the key regulatory expectations is proper governance; i.e., being in a position to demonstrate (by which we mean “to evidence, to document”) that each regulation is understood, the relevant course of action has been taken, the adequate conclusions have been drawn and the resulting consequences were indeed followed up on. How can this be achieved without a proper, secured tracking system?
• The best players will analyze their investors’ and prospects’ behavior to seize new opportunities. Therefore, understanding distribution will be key to staying in business.
• Investors and distributors will expect a close and quality-driven relationship with their product manufacturer. ManCos will be instrumental in establishing these links. Having a universal reporting factory will be the first step in the industrialization of customization.
Finally, the digitalization of ManCo processes will convert into cost savings — fewer manual tasks, more qualitative data sets and predictable processes, and faster processing cycles. Furthermore, ManCoTech will create an edge over the competition which, in turn, could lead to an increase in business volumes, largely justifying the IT investment.
The business case is there, and while it is true that ManCoTech does not exist at this very moment, it is not sci-fi either: most of the building blocks already exist and just need to be intelligently combined. There is no doubt that to reap the benefits of technological breakthroughs, significant development and change management efforts will be key. It is only up to us to make it happen.
So, let’s do it! And maybe, in a couple of years, we will reminisce about the term “ManCoTech” in the same way that only Generation X remembers the term “e-commerce”.