Fund managers, pensions and insurers globally are seeking to capture the transformative potential of data and analytics to create new value and secure competitive advantage. While objectives vary, every organization faces a common challenge: The pace of change, both of technology and regulation, is rapid and relentless.

In this article, we discuss our vision for data and technology innovation, and how Canadian investors can confidently navigate this journey.
 

Aspiring to a common goal: The need for operating model simplicity

Canadian fund managers and pensions are among some of the largest and most sophisticated organizations globally. They are targeting growth, efficiencies of scale and an expanded international footprint. Above all, they are focused on improving outcomes for their investors and beneficiaries.

Technology is central to achieving those goals, requiring a unified investment operating platform underpinned by trusted data from across the enterprise. In practice, this means an increasing number of partnerships between investment firms and strategic service providers.

This is not to suggest that outsourcing provides all the answers. Instead, think of smartsourcing – an approach that strikes the optimal balance between internal and outsourced capabilities designed to suit the unique demands of each organization. For example, smartsourcing can leverage outsourced services while implementing a core system and growing internal talent and processes to differentiate, using a balance of approaches to evolve efficiently without accumulating technology debt.

Culture is also a fundamental part of effectively managing operating model transformation, and requires involvement from every employee, regardless of role or title. Change management, architected across operations teams, and enabled by dedicated and responsive experts overseeing the process, can help businesses embrace transformation.
 

Toward the next generation of platforms: Balancing value with complexity

What does a next-generation platform look like? Increasingly, the consensus approach chosen by the world’s largest investors is to pursue an all-in-one model combined with additional cutting-edge functionalities from external providers.

For example, in pensions globally there is a growing movement toward internalization of asset management teams. This requires large-scale adjustments, from reassessing how teams are aligned, to determining which platforms they use for risk management, portfolio construction, compliance and trading. SaaS tools offer much to enable this shift, but their value has to be balanced carefully against the potential complexity and cost to the business.

Considerations include the availability of customer support and servicing locations — particularly for the most critical applications. The reality is that flexible platforms built on SaaS tools may not be as “hands-off” as initially anticipated.

Involving the IT team early in the change process is essential so team members can offer a perspective on limitations stemming from the firm’s infrastructure — and gain useful insight from the discussion around business value.
 

Actionable insight is what matters — and data is key

Canadian investors are looking for reliable insights on which they can act. However, these aren’t attainable without a high-quality data set that allows users to “connect the dots.”

This makes it imperative to focus on getting the core data right before moving on to anything else. That foundation also has to be flexible and scalable: think in terms of being able to understand and verify the data through end-to-end traceability and well-disciplined data cataloguing, irrespective of the domain.
 

Be ready to adapt quickly to shifting market dynamics

The target operating models of the future are living, constantly evolving organisms; the broader landscape is too complex and multi-dimensional to define a best-in-class approach at a fixed moment in time. Agility and interoperability are non-negotiable to success.

Extending the operating model to accommodate new requirements for data remains a key hurdle. For example, expanding the scope required to incorporate private markets data often depends on outdated information. Successfully leveraging complex, unstructured markets data requires modern AI-driven capabilities to support private market portfolios at scale.
 

Key takeaways for Canadian fund managers and asset owners

The future state operating model that leading institutional investors globally are migrating to is summarized by five key attributes:

• Autonomy and flexibility – A platform that fits your operating model, rather than requiring the model to shift
• Data transparency and control – Full ownership and end-to-end visibility of your data
• Scalability and growth – A solution underpinned by technology that evolves with and supports your growth ambitions
• Predictable costs – Tailored solutions that get you past the barrier of costly outsourcing solutions
• Access to expertise – Ongoing support from subject-matter experts and cutting-edge technology built for the future.

The generational potential for innovation is huge, but requires a transformation in technology, culture and processes. To succeed, firms must re-think core operational assumptions and consider the potential of partnered solutions.