The Tech-Forward Future of Asset Management in EMEA

By Antony Slee, Sales Director, FundGuard

In September 2023 we opened our London office and welcomed our new EMEA team, including Ravi Patel, Pre-Sales Director, and Antony Slee, FundGuard Sales Director. Since then, Antony and Ravi have been actively engaged in discussions with our clients, partners and prospects in the region – discussing their planned paths for transformation and helping to uncover the barriers inhibiting firms from taking their next steps toward true technological and operational transformation.

We are pleased to introduce Antony’s inaugural blog for FundGuard, where he reflects on these recent discussions, outlines how everything from systems complexity to M&A can create barriers to change, and suggests how firms can overcome the common challenges that are preventing true change.

The Industry is Evolving, But Are You Ready to Adapt?

Though many firms have now outlined very clear paths to digitalization and true operational transformation, I have also encountered many large asset managers and asset servicers who are still managing significant amounts of assets on outdated technology and operating models. This will continue to pose considerable risk for their clients and their own firms, threatening future growth and even the very existence of their business. So why the “wait and see” approach?

The path to digital transformation is no small task, but the benefits of the journey far outweigh the repercussions of doing nothing.

So what now?

Focusing on the “How”

The industry, both globally and specifically within Europe, has reached a crossroads. While everyone now seems to have reached a general consensus that investment operations need a modern tech transformation, confusion remains on how to execute meaningful change.

As a result, questions about adopting new technologies have evolved from “Why?” to “How?”

Thinking about it pragmatically, any new tech company would build their infrastructure from cloud-native technology, ensuring they have a sturdy, modern foundation.

Yet, for firms that are several decades old, the switch from a labyrinth of legacy systems to streamlined cloud-native platforms can be intensive. There remains a lag between everyone acknowledging the need for technology transformation and actually dedicating funds and resources to achieving that goal.

Through my conversations with prospective clients across the EMEA region, I have discovered much of the hesitation comes down to identifying the barriers to change within an organization and then creating a clear roadmap for effectively surmounting those barriers.

Identifying Barriers to Change 

Change does not come without challenge.

In any scenario involving the implementation of new tech, there will always be barriers to entry, especially for businesses and firms still relying on outdated legacy systems.

Sure, there are innumerable benefits to evolving, but where does one start?

Sticking with the status quo can certainly feel easier than attempting to unwind the perplexing riddle of systems and processes currently in place. These tangled systems are the overarching challenge organizations must tackle, but the task can be divided into more manageable bits simply by identifying two key barriers:

1. Budget Allocation: Budget allocation is always a factor in conversations centered around technological upgrades. Regulatory compliance and security are big-ticket items that must be prioritized first, often leading tech upgrades and digital transformation to fall to the wayside. Plus, as you go down the pecking order, front-office teams tend to be granted greater decision-making power in budgetary scenarios since they are on the frontlines of revenue generation. By the time budget prioritization reaches the middle and back office, there may be little funds and resources to work with for improving an organization’s technical infrastructure.
   
   
2. System Complexity: For non-cloud-native infrastructures, the complexity of a system can quickly get out of hand. Aside from having to deal with jurisdiction-specific compliance requirements, organizations still relying on legacy technologies can wind up dealing with six or more systems all entangled in a massive, unoptimized web. When considering an operational transformation, these organizations must juggle both the costs of implementation and the logical conundrum of how to consolidate their maze of systems into a more streamlined operating model.

In terms of aligning technological upgrades with budget allocation, it all comes down to making better investment decisions. Rather than overlooking the middle and back offices, firms must instead consider how fixing back-end capabilities can improve your overall data and performance.

The argument for optimizing the back office has become increasingly apparent — unless you start from the back to fix the foundation of your operations and data sources early on in the process, then you will never achieve a truly optimized front office.
What this calls for is not an increased budget but a reimagined one.

Recognizing the value of investing in your back and middle office processes can have business-wide benefits that help you expand into new regions while maintaining a highly scalable and flexible foundation.

As for system complexity, that’s where trusted technology and software partners can help.

M&A: The Third Barrier to Overcome

Aside from the barriers of budget allocation and general resistance to change spurred by the complexity of current systems, a third barrier also exists — the amount of M&A activity going on right now in our region.

M&A poses both a barrier and an opportunity when it comes to consolidating systems while also adopting technological change. When your firm is in the midst of an M&A with another firm, you must consider how that other organization’s systems will align with your own.

I have little doubt that we will continue to see increased M&A activity across the industry and particularly within the European markets. This increased activity inherently pushes firms to reassess their digital infrastructure, looking specifically at cost-effectiveness and scalability.

Don’t Compare the Present to the Past

When conversing with industry colleagues, I have encountered numerous misconceptions regarding the scope of unwinding a legacy system. I commonly hear the concern that taking the leap into the cloud-native, “big data” realm requires exceptionally heavy lift, potentially hindering business efficiency along the way.

If your organization has five, six, seven, or more different systems, you end up with a spaghetti bowl of operations. Without guidance and expert support, figuring out how to detangle this mess of outdated systems can bring back memories of past implementations that were equal parts long and painful.

The negative preconception of change stems from these previous painful processes that likely required lots of resources for variable success rates. In turn, many organizations may feel hesitant due to the money, time, and effort lost on unsuccessful transformations.

However, those previous implementations lacked the efficiency of cloud-native capabilities. As a result, looking at a modern implementation through the legacy lens can lead to further uncertainty.

This once again circles back to the importance of a reliable and trusted technology partner. As firms strive to move away from legacy tech and toward the cloud-native future, they need a partner committed to providing peace of mind and greater clarity on the pathway to a successful implementation. While it may not be a walk in the park, the right partner can guide firms through the crucial steps needed to update their infrastructure and make sense across disparate systems.

Remember — just because change was painful in the past doesn’t mean it has to be in the present.

Transform with FundGuard

The path to change is never easy. It’s a bumpy road full of unexpected challenges, hurdles, unforeseen circumstances, and frustration.

Yet, with the right approach, embracing change can be the key to optimizing your operations.

At FundGuard, we have the tools, experience, and specialized industry knowledge your organization needs to streamline your cloud-native transformation and build a solid investment accounting foundation to power your cross-enterprise operations.

Ultimately, the reason for change comes down to the significant savings that evolved technology can afford you in the long term.

Though any implementation has upfront expenses, migrating to a modern infrastructure can provide you with the reliability, scalability, and flexibility your business needs to achieve true operational resilience.

Get in touch with the FundGuard to get started.