Fueled by the drive toward true cross-enterprise digitalization, the asset management industry is evolving far beyond the scope of legacy technology. As this evolution continues to accelerate at an incredible rate, firms are focusing on how digitalization can drive fundamental change to help increase alpha, reduce risk and enhance customer experience.
The path to true digitalization will ultimately rely on an industry ecosystem that is cloud-native and silo-free, and more and more firms are now looking to their providers to help facilitate this vision. Getting there requires a collaboration between technology and service providers to offer integrated solutions powered by cloud-native applications and services to support the entirety of their clients’ investment management operations.
For asset managers and their service providers, this includes the need for robust investment accounting technology and services that can serve as the backbone for their entire operation.
We recently met with Alan Schneider, FundGuard’s Partnership Sales Director, to discuss how FundGuard is partnering with leading asset servicers and product providers to deliver a powerful investment accounting foundation that can serve as a utility for the entire industry.
FG: At FundGuard, we believe that the path to digitalization must start in the back office, and that investment accounting should be the foundation of all the work that goes on within the investment management lifecycle. What does this mean for other investment management technology vendors and service providers who also have a vital role to play in the industry ecosystem?
AS: To achieve true front to back digitalization, financial services institutions rely heavily on their vendors to provide them with the support needed to obtain, and then maintain operational efficiency with trustworthy data. Modernizing investment accounting operations – or helping your clients to do so – should be a crucial first step toward achieving true digital transformation – enabling real-time data discovery, insights, reporting, and more.
FG: What do we mean by the FundGuard “ecosystem?”
AS: The FundGuard ecosystem is our collective of clients and certified partners that leverage FundGuard’s cloud-native technology as the core for a modern approach to investment accounting and operations.
When we talk about the ecosystem, we are referring to, on the most basic level, the mutually beneficial relationships that exist between FundGuard, industry service providers, other software and market data vendors, and the clients that both FundGuard and our partners support.
Of course, partnerships of this nature have always existed within our space. What our team at FundGuard is now doing, is the enablement of our partners to focus on what truly distinguishes them, while leveraging the distinct technology innovation and capabilities FundGuard provides to support their clients’ digital transformations. This goes for both our vendor partners and the end-point clients we both serve — our vision is to create a global utility that will drive a new era of investment management operations for the industry.
FG: Can you explain how FundGuard is modernizing investment accounting and why it’s important?
AS: Investment accounting modernization means providing an investment accounting solution that operates flexibly across the investment lifecycle.
Achieving this requires many moving parts, most notable of which is a truly cloud-native core. Without this, the resulting best-of-breed or all-in-one solution won’t be much better than existing legacy systems. Being merely cloud-enabled won’t be enough in the long run.
FundGuard is a fully cloud-native system that provides access to data-first resources like APIs that are easy to use for highly specific purposes. In designing these APIs, we considered all the potential use cases within the industry — including everything from compliance reporting and decision-making to trade executions and portfolio management — and ensured that these APIs can be employed to provide the data-first support needed in each specific use case.
FG: So, FundGuard’s cloud-native technology provides the APIs needed for a data-first approach — what does this look like in action and where is that data coming from?
AS: We are constantly being bombarded with these cloud-related terms — yet, few providers actually offer the cloud-native capabilities that FundGuard is able to provide.
Cloud technology is the basis of FundGuard, offering perpetually available data that can be used for numerous purposes. First we readily accept and verify investment data, process securities and portfolio life cycle events in real-time, and deliver actionable information to front-, middle-, and back-office applications, with a mass-customization approach. This is what we refer to as our multi-tenant capability, affecting the processing as needed by the specific end-user need with the most current,and historical, data stored in the various books of record.
Circling back to the question at hand, none of this would be possible without a cloud-native core. Being cloud-native has enabled us to develop global investment accounting capabilities based on microservices communications that both simplify integrations and deliver data with far greater speed.
This also translates into better testing processes as well — as a cloud-native utility, FundGuard has developed continuously running testing and release processes so our clients can begin to use new capabilities without disrupting business operations in the slightest.
FG: Can partners offer “white labeled” investment accounting products and services through their collaboration with FundGuard?
AS: Yes, they absolutely can.
FundGuard fully enables the white-labeling of our investment accounting technology. For example, if a vendor is facing heightened demand for digital investment accounting solutions, they can white-label our technology to expand the capabilities clients seek from them as trusted providers, while enhancing the perception of their own products and services.
Even if that vendor is only cloud-enabled, the fact that FundGuard is fully cloud-native means that they will still benefit from all the real-time data capabilities we have to offer.
In practice, this can be applied in many ways — our technology can help bridge the investment accounting gap for service providers that already have partial investment accounting solutions in place, as well as serve as the investment accounting solution to create full-blown software-as-a-service (SaaS) providers.
FG: Can you quickly touch on some of the additional benefits that being cloud-native brings to the clients and partners you service?
AS: Two of the first that come to mind are accelerating our partners’ time to market and time to revenue.
Non-cloud-native technology lacks the same nimbleness, making tasks like integration design, coding, testing, and implementation more burdensome. Additionally, FundGuard’s cloud-native technology leverages more advanced resources like machine learning that help to ingest and validate data at a much faster rate. This reduces implementation time and effort, so that conversions can be completed with significantly greater speed compared to traditional systems.
For instance, where legacy technology may require between 18 to 24+ months to convert an accounting system, FundGuard’s cloud-native technology can reduce this to just 12 months or less. Our clients win with reduced implementation costs and by gaining FundGuard’s benefits sooner. Our partners win for the same reasons, making our joint clients happier and capturing the benefits of the client relationship sooner.
FG: Would you say that digital data capabilities are a core tenet of FundGuard’s investment accounting solution?
Digital-first is the future of investment accounting and is one of the vital capabilities that being cloud-native enables. FundGuard has a massive amount of data available across the entire system that can be used to power our machine-learning models that increase operational efficiency while our data stores provide all information needed by other activities at the asset manager readily available.
Additionally, FundGuard keeps a full record of all data entries and corrections. This means that our technology can not only provide real-time data insights but also a trustworthy data record that can be traced all the way back to the source of the data.
This is vital when you consider the back-end use cases where regulators require that kind of lineage as proof in the relevant compliance reporting and helpful when trying to justify positions to demanding front-office accounting data users.
These data capabilities help support more informed and confident investment decisions due to the inherent trust established by FundGuard’s data processes.
FG: Let’s pivot for a moment into the additional value-added capabilities of FundGuard’s investment accounting solution. In what ways is this technology adding value that creates new opportunities and operational efficiencies for your partners?
AS: At the very heart of FundGuard’s investment accounting solution is a low-compute Big Data database. What this means is that leveraging Big Data ensures our partners and shared clients never have to go back and redo computations for the data they need.
When you compare this to legacy tech solutions, this translates into major savings that help our partners and clients enhance margins with lower tech and ops costs.
This emphasis on low-compute and affordability is central to FundGuard. In today’s investment accounting landscape, legacy technologies alone are simply not offering the cost efficiency and flexible capabilities our partners and potential partners need to increase margins, even when cloud enabled. Meanwhile, FundGuard places cost efficiency at the center of our data initiatives, reducing the time-consuming manual processes that are prevalent today.
The other major way that FundGuard’s technology adds value for partners is by finding the capabilities within our solution that fit the specific needs of each partner’s niche. As a result, our partners are given new opportunities to expand by enabling more advanced books of record, such as an Investment Book of Record (IBOR), as well as running contingent NAVs (CNAVs), which are increasingly more vital in the face of today’s cybersecurity and climate risk threats.
FG: Does FundGuard inherently reduce market competition or enhance it?
AS: FundGuard’s investment accounting solution fully enhances the ability for our clients and partners to compete more broadly.
As it stands now, investment accounting activities are creating a bottleneck for asset managers and their service providers. When firms have to commit team members, resources, and time to “commoditized” functions such as investment accounting, there is little left over to focus on the more distinct functions that would truly sharpen their competitive edge.
With FundGuard serving as an investment accounting utility for our clients and partners, organizations can focus their resources more on competitive differentiators, such as new business initiatives and areas of innovation.
This ultimately brings us back to what we discussed at the very beginning — that partnering with FundGuardwill create a foundational utility for investment accounting that empowers the entirety of our industry to do their best work.
Our clients and partners are shaping the future of investment accounting and will be the first to see the benefits of a high-quality utility that is informed by cross-industry collaboration, removes the pain and risk of back-office processes and frees up time and resources for true differentiators.
If you’re ready to become a FundGuard partner, contact our team today.