My previous blog - “Post pandemic reset: digitalisation in fund management” - focused on WHY fund managers should embrace digitalisation of front and middle office processes.
Right now, there is less resistance, both within fund management organisations and with external stakeholders, to digitalisation (in fact there is probably a tailwind) given the changes forced on us during lockdown. However, this window will not remain open for long. We will fall back into old ways of doing things. We are creatures of habit.
This blog focuses on HOW to overcome the hurdles to digitalisation that were discussed in the last blog. The reset that the pandemic forced on us has temporarily lowered the resistance to change, but the other hurdles - high investment, long time-to-market, and disruption of business - remain and are real.
So, how do we overcome these hurdles?
Start by ditching the traditional playbook, which goes something like this….
Indulge in a bit, ok a lot, of navel-gazing. Lament the sub-optimal nature of existing systems and technology infrastructure. Engage in some process mapping and gap analyses. A great deal of time and meetings later, an eight or nine-figure budget will be passed to undertake a technology transformation project (if it isn’t put into the too-hard basket). Much eye-rolling in the business. Deja vu. Months turn into years, with eye-watering budget overruns (even before accounting for the distraction and cost of disruption to business).
There is another way.
Your current processes and systems work, even if they are a bit clunky. If you were starting from scratch, you would do it differently, but you are not.
Decouple your front and middle office digitalisation from any top-down technology transformation ambitions or projects. If your digitalisation is cutting edge, the interface with your legacy technology will evolve as your tech platform transforms over time, whether you embark on a grandiose big bang technology transformation or a more gradual evolution of your legacy systems.
Decouple your front and middle office digitalisation from reengineering your existing business processes. Digitalise your current processes. If your digitalisation is well architected and flexible, business processes can be optimised continuously, over time.
The needs of a business never standstill. The processes and technology of a successful business thus have to evolve continuously. Embracing digitalisation right now doesn’t mean that processes and systems will have to be frozen in their current state. Decoupling the digitalisation program would significantly reduce time-to-market and disruption to the business.
License a platform. Don’t build or buy.
Fund managers are not good at building technology platforms. It will always cost more than is budgeted, and it will take much longer than first estimated to build. Moreover, once built, changes will be frustrating to make and will take what feels like forever. I don’t think I need to labour the point.
Don’t get someone else to build it for you either. You will still have to make a significant investment. You will still be responsible for updates and maintenance.
Instead, look to Fintech for the answer. License a platform specialising in digitalisation of front and back-office processes/interfaces in fund management. A specialist digitalisation platform will have modules and components that can be customised to accommodate not only the unique needs of different fund managers’ processes/products/services but also the different requirements across business and functional units of a fund manager.
Licensing a specialist digitalisation platform will not only mean no upfront investment and significantly lower time to market, but the platform provider will be responsible for updates and ongoing maintenance as well.
In the next blog in this series, I will focus on WHAT organisations need to do to maximise the probability of success of their digitalisation programs. I will outline the technology and architecture of a cutting-edge platform and features to look for. I will also discuss the merits of adopting an agile process for customising a platform.
Written by Shamindra Perera, founder of EXcubed and co-founder of WealthOS.
EXcubed is a specialist fintech product company that has developed, deployed, and operates a front and middle office digitalisation platform for fund managers.
The EXcubed platform is cloud-native and modular in design. It is flexible in how it interfaces with internal and external systems. With plug-and-play features and customisable components, it allows processes and interfaces to be digitalised quickly. Moreover, modifications and changes to workflows and interfaces can be accommodated easily and continuously. The EXcubed platform has been customised and white-labeled by one of the largest fund managers in the UK.
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