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Fund administrators pressured to do more for funds’ efficiencies

operational efficienciesFund administrators and transfer agents (TAs) are failing to adequately support asset managers in gaining greater operational efficiencies, research indicates.

Fund administrators and TAs are usually owned by custody banks that are deeply involved in fintech research, but the message is that they need to do more to innovate technology that supports asset manager operations.

The Temenos Multifonds ‘Every fund survey’ - which includes asset managers and administrators themselves in the responsdents, found:
     •   About 90% said operational efficiency will become increasingly important and that it is already important for profitability.
     •   94% said tech innovation in operational support needs to accelerate.
     •   One-in-four said fund administrators and TAs are not keeping up with asset managers’ requirements.

Efficiencies were the top priority for the next 12 months, followed by product development, digital channels and risk management.

Many respondents said third-party tech providers could have an important role to play in bringing the industry up to speed with operational technology.

Evidence from the survey suggests that fund administrators need to focus on supporting new asset classes such as ETFs and finding insights through data analytics.

They need also to open up new markets and jurisdictions; increase the speed of adaption to regulatory change; shorten the time period to produce NAVs; and increase client oversight and control.

Oded Weiss, managing director at Temenos Multifonds, said demands on third-party service providers had changed due to factors like competition through robo-advice and other digital channels.

Regulatory needs for firms to have real time oversight, and pressure from lower fund fees were other sources of demand on service providers.

“To keep pace with the demands of the industry, third-party administrators now need to invest in the technology, data and services to help asset managers compete in the digital world, by opening up new asset classes, unlocking insights from data, improving the user experience, and increasing oversight and control,” Weiss said.

Asset managers made up about one-quarter of the 100 global respondents.

Tememos is a Swiss-based banking software company and in 2015 acquired Luxembourg’s Multifonds, which provides software for fund administrators.

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