Can Asset Managers deliver digital transformation and operational resilience simultaneously?

In short yes.

Investment management has always desired to rapidly digitise operations but the reality, like much of the financial services sector, has been starkly different. Innovation has been, at times, glacial as regulatory remediation and pandemic stress have consumed internal resources. Moreover, firms remain fearful of stepping outside the parapet of long-established technologies.

The wealth of truly innovative technology solutions in the form of SaaS providers remains the key to rapid change. Historically the industry has failed to balance the juxtaposition of the benefits versus the risk of adoption, resulting in the concentration of  a few large suppliers at the expense of innovation and competitive advantage, further adding friction to the innovation dynamic.

Innovation with SaaS providers is easier than you think! 

There are three steps to innovation – VALIDATE – INTEGRATE – INSULATE

Validate

It is critical to match your requirement against that of a provider. Sandboxes that allow the risk free matching of Enterprise requirements with B2B SaaS solutions will ultimately streamline this process. Considerable progress has been made with initiatives, such as, the FCA’s digital sandbox. In the meantime working with your business heads to compose a standardised questionnaire to compare service offerings will get you a long way to validating the right offering for you.

Integrate

Unravelling and maintaining legacy technology architecture is complicated but not insurmountable. At some point in the not too distant future the cost of maintaining those architectures will be prohibitive and far outweigh the benefits, cost or otherwise, of a more malleable approach using SaaS providers.

Integration needs to be easy. It is time to start thinking about standardising APIs and making it easier for your business to adopt the micro services that best meet near-term requirements and at the same time providing the agility/flexibility to change to new services in the future.

Insulate

Of course, it doesn’t matter if you pick the right technology offering and quickly integrate it, if they go bust a week later. Failures create unplanned service disruptions, unhappy customer outcomes and regulatory scrutiny so its key that firms mitigate and actively manage those risks. This is our area of expertise.

  • Active risk management

Business continuity has historically focused on internal operations, as third-party risk would only be assessed at the point of procurement. These point-in-time assessments do not account for the changing nature of a business, especially fast changing Fintechs. Understanding whether the third-party is about to be acquired, pivot or run out of money is essential to successful risk management. By conducting on-going risk assessments from the outset to conclusion of a third-party engagement, your firm is far more likely to identify and reduce operational risk.

  • Risk mitigation 

Regulators require firms to establish and maintain step-in plans for critical outsourced services. These aim to mitigate risk, ensure operational resilience and ultimately protect the end investor. New constructs have come to market to fully support third-party continuity plans, for example, it is now possible to take out continuity assurance cover for your third-party technology suppliers.

This fully managed version of software escrow ensures that if the SaaS company fails, the assurance provider will step in to independently operate the service for a 3-6 month period providing the continuity needed to protect the day to day operations of assured clients.

The pandemic underlined that innovation can occur at breakneck speed. Innovation will drive down costs, increase productivity and improve customer experience and service. There are a myriad of SaaS solution providers ready to help you achieve rapid and lasting improvements and following some simple steps will deploy them in less time and with less risk than you think.

Further articles

Menu