Modernising asset management with Software-as-a-Service (SaaS)

By Suraj Poozhiyil, SVP and Head of Product, Clearwater Analytics.

The asset management industry is filled with firms relying on outdated, legacy technologies. While companies may have gotten by in the past, the pandemic and remote working have exposed the inconvenience of these expensive and inaccessible on-premise infrastructures. Working from home had meant that these employees struggled to access critical data and applications, disrupting businesses at an already volatile time.

Conversely, cloud-based, Software-as-a-Service (SaaS) solutions have proven invaluable in enabling teams to access data remotely and ensure that businesses operations could continue.

Breaking the cycle

At a time when companies are cutting costs to maximise growth, the financial burden of obsolete, technological infrastructures is immense. In fact, a study by Oracle revealed that large financial institutions could lose up to $1.5bn in revenue if they do not leverage new technologies quick enough. On the other hand, firms with advanced, cutting-edge solutions reported revenue growth of more than eight per cent.

Yet, the use of legacy technologies persists. Having invested a great deal of capital into these systems, asset managers often feel ‘indebted’ to them. But this presents a false saving. Many companies are finding that their infrastructure is failing to provide the required functionalities, causing greater inefficiencies. The primary issue is data accessibility. Access to real-time data, not easily achieved via legacy technology, is vital for asset management firms to provide investors with critical business insights.

It is also becoming more difficult to maintain legacy mainframes as they age, leading to increased maintenance costs in the long term which eat into profits.

A fertile ground for SaaS

Among the frictions caused by legacy systems, the pandemic exposed one major flaw: its inflexibility. While remote teams could not access these on-premise infrastructures, it was business as usual for organisations that adopted cloud-based solutions before the COVID-19 outbreak. As distributed and hybrid workforces became the norm, firms had to quickly adopt SaaS technologies to ensure that their workforce can access critical data, no matter their location.

SaaS will also be key in facilitating key priorities for the asset management industry. According to a survey by Northern Trust, expanding into new markets is a key strategic priority for 85 per cent of asset managers, while 69 percent want to support new asset classes and half aim to expand their product set. To achieve these goals, 64 percent of respondents reported plans to leverage new technology, including cloud-based data management solutions.

It’s therefore, no surprise that major industry players are investing in building subscription-based SaaS systems. For example, BlackRock put a vote of confidence in cloud technology when it set up its Aladdin infrastructure on the Microsoft Azure cloud platform last year.

SaaS is a golden opportunity for all enterprises to remain flexible and agile in a post-COVID world. By moving processes to the cloud, businesses can achieve greater operational efficiency and scalability as employees can reliably access data from any device and

location. Firms can then nimbly expand into new asset classes, drive growth across their regions, or quickly bring new products to market.

Unlocking the puzzle of compliance

A key area where SaaS proves valuable is compliance. At the moment, European asset managers face a challenging landscape of stringent and rapidly evolving regulations. Alongside the International Financial Reporting Standards (IFRS), investors must also abide by country-specific variants of the Generally Accepted Accounting Principles (GAAPs).

Instead of expending resources to keep up with the fast changes in regulations, asset managers should be focused on servicing customers, investing funds, and growing their business. Unlike legacy, on-premise architectures, which require manual processing, SaaS systems can help asset managers keep up with these new and existing rules.

With near-real-time data streaming, SaaS systems seamlessly integrate regulatory requirements into reports as they come into force, while offering transparency and governance over data. The scalability of the technology means that large volumes of data can be automated, managed and processed, as needed.

To stay ahead of the competition, enterprises must replace outdated legacy systems with SaaS to manage the burden of compliance, have a full view of their assets and be able to make decisions quickly.

Staying at the cutting-edge

During the current period of economic uncertainty and heightened regulatory scrutiny for investors, SaaS solutions offer asset management firms a competitive edge. By ensuring distributed workforces remain connected, the adoption of cloud-based technologies is critical to staying agile and flexible. At the same time, SaaS brings simplicity to an otherwise complicated world filled with various regulations, such as GAAPs and the IFRS.

In this challenging investment environment, moving away from legacy system technologies and adopting SaaS solutions can determine the success of an asset management firm and establish it as either an industry leader or laggard. Therefore, with a “single pane of glass” view of data, reporting and analytics, businesses can harness key insights to drive operations forward and act swiftly, no matter the scenario.


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