What Does Growth in Alternatives Mean for Technology and Operations?
20 December 2016
Alternative investments are growing dramatically. PwC projects an overall growth rate of 11 percent per year, from US$10 trillion in assets in 2015 to $18.1 trillion by 2020. Alongside this growth, investors are expecting a higher level of service and transparency, according to PwC. This means that operational and technological support will need to improve to effectively manage the expansion.
Client communication processes need to evolve – especially in wealth management, which has less automation than other asset classes. Lack of automation results in low client satisfaction due to frustrations with delivery inefficiencies. Among financial advisors and investors, the absence of e-delivery options has resulted in a reputation of alternatives as “still being in the dark ages.”
Technology needs to enable self-service content submission for external partners. Otherwise, back-office operations teams waste hours of time manually collecting individual reports from external fund managers. By automating the content collection process through self-service submission capabilities, teams can save time and resources, and deliver information to clients quicker and more efficiently.
Evolving industry regulations around data protection will need to be followed (more info on SEC examinations). Firms should be wary that both the level of fines and the frequency of audits related to the protection of clients’ personally identifiable information (PII) could rise over the next year. This is a pain point for firms that rely too heavily on email and paper processes. Additionally, investors have privacy concerns when bank communications are sent to their doorstep rather than through a secure online portal.
Partnerships with outsourced technology providers will help reduce overhead costs, while leveraging expertise. Today, firms have access to technology solutions, such as an online communications platform which makes the entire client reporting process faster, more effective and secure. Such solutions also provide added benefits of streamlining internal operations, improving client satisfaction and supporting client retention efforts.
For more information around where the growth in alternatives is originating, view the PwC report. For information around technology solutions that can help streamline the client and investor communication process, visit the Intralinks® website.
Kylie Horner is an Associate in Strategy and Product Marketing at Intralinks. She is part of the team responsible for determining go-to-market strategies for the debt capital markets and alternative investment businesses. Prior to joining Intralinks, Kylie worked in marketing and communications at ACTIV Financial, a financial information technology firm. She graduated from the University of Colorado at Boulder with a degree in Journalism, and a specialization in global media.