Today’s advanced technology has transformed industries worldwide, creating new efficiencies and opportunities. Not surprisingly, many participants in the private capital industry have been reaping the benefits as well. However, if your firm has not yet jumped on this trend, now is the time to ensure you stay competitive. In this article, we’ll look at how the industry is engaging with these technologies and how your firm can benefit.
Tackling Data Management Challenges
Asset managers, especially those specializing in alternatives, have long accepted the reality of inefficient processes. Many teams find themselves constantly interacting with spreadsheets, manual processes and freestanding systems that don’t communicate with each other.
In the past, this was rationalized with the thinking that there were simply not enough transactions to justify an investment in automation. However, between increased regulations and environmental, social and government (ESG) rules, attitudes are changing. At the same time, investors are demanding more transparency and reporting. The only way to realistically accomplish all this is with automation.
Fortunately, technology continues to advance, so it is rising to the occasion.
Benefits of Upgrading Your Data Processing Systems
By automating repetitive and laborious processes, you can free up your team to focus on adding value and better managing investments.
That means it is time to eliminate outdated or siloed programs and replace them with more integrated systems. In addition to traditional automation options, there are more choices today than ever.
Automation Can Create a Competitive Advantage
Going forward, the increasing trend toward digitalization will result in in leaner and more efficient processes. With that freed up time, your team can focus on priorities such as bettering the onboarding process and reporting capabilities to keep investors happy.
Automation utilizing cloud capabilities is also continuing to provide more flexibility and agility to financial firms. Shifting more to the cloud can help you lower the cost of IT infrastructure and maintenance while improving security and collaborations.
Overall, today’s powerful technologies have the ability to streamline your operations in many ways. This will result in increased efficiency for the asset manager as well as reduced operational costs for the firm.
Data Analytics Can Give You an Even Bigger Edge
The growing field of data analytics can provide additional benefits. In some cases, asset managers are using analytics to not just incrementally improve but to actually transform their businesses.
One article published on Wharton.com shows what is possible. Entitled “Data Analytics is (Slowly) Transforming Private Equity,” this piece tells the tale of two data analytics trailblazers in the private equity space. Combining this technology with a traditional approach, Two Six Capital pioneered the use of data science in private equity. The firm uses large-scale, cloud-based engineering to handle large data sets and view what is happening in a business on a minute-by-minute, day-to-day basis. Instead of using rules of thumb or averages, Two Six Capital has the benefit of specifics: they use about 28 standardized analyses and 18 statistical machine-learning models to view a company’s vital signs as they occur. In their experience, data analytics can reveal insights that topple conventional wisdom, providing a distinct edge and helping better control risks.
As you can see, data analytics have great promise to help investors make better investment decisions, since you can quickly see the real-time data and performance of your portfolio companies. This has the potentially to significantly transform your firm’s growth over time.
Roadblocks to Better Automation (and a Workaround)
Of course, one significant roadblock to implementing new automation solutions is talent. While automation has the potential to make your team’s work much more efficient in the long term, initially the effort will require even more help for the scoping, programming, testing and implementation. Today, talent can be hard to find. And when it comes to building systems you’ll rely on for years to come, you have to be selective so you find the right firm or team to help.
In today’s tight labor market, one workaround many firms are turning to is outsourcing. By utilizing specialists who know how to leverage financial technology, you get a shortcut to the know-how and access to the talent needed to put it in place. As importantly, you can stay focused on your core business instead of getting sidetracked by researching and managing these projects.
For small tomedium sized firms, outsourcing is often a far more cost-effective solution as well.
Why Automation Partnering Might Make Sense
With regulation, compliance and time constraints, it’s unsurprising that many asset managers aren’t farther along in the automation process. That’s where outsourcing might be a way for you to close both the talent and technology gap.
At Linnovate Partners, we provide comprehensive fund administration solutions using superior technology, so you get the best of both worlds. As specialists in the alternative asset space, we understand your needs and can help you research and implement practical solutions. We’ve helped many clients streamline their fund administration, allowing them to become more focused and competitive in the future.
Are you looking to step up your technology and results?
Linnovate Partners can help. Contact us today for a complimentary consultation.
