The Ecosystem Imperative
Building Your Investment Tech Stack for the Future
TABLE OF CONTENTS
Over the past decade, there have been significant shifts both in investment technology and how investment managers think about their technology. What was once a tactical afterthought now takes center stage as firms seek every advantage in a complex and evolving market.
However, all this change can leave firms feeling less than confident when it comes to their investment technology. They wonder: How can I maximize my technology investment and give my firm the best shot at operational success? What is the gold standard for investment operations today?
In this ebook, we explore how investment technology has evolved over the past decade and the rise of the investment ecosystem model – the gold standard of investment technology approaches today. We’ll also examine the technology supporting this standard, its benefit to firms, and how you can employ this model at your firm.
In this ebook, you’ll learn:
- What the investment ecosystem is
- About the rise of interoperability and the investment ecosystem model
- What technology enables this model
- The benefits of this approach for your firm
- Tactical examples of how you can design your investment ecosystem with technology, data, and services
- Open technology risks and considerations
- How you can begin building your investment ecosystem
Gain a greater understanding of how to leverage today’s gold standard of investment operations to maximize collaboration, efficiency, and agility at your firm and better leverage your operations as a strategic advantage.
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The Evolution of Investment Technology
Beyond Solving the Swivel: Increasing Efficiencies Across the Firm
Over the last decade, much of the focus of the investment technology industry has been on addressing the ‘swivel chair effect’ – eliminating friction between the OMS and EMS in the front office and increasing efficiencies in accounting and reporting in the back office.
These advances have benefitted firms by streamlining systems and data, giving them access to improved functionality and better, more actionable insights, and freeing up valuable time for individuals across the firm to focus on higher-impact tasks. However, with no shortage of challenges in the industry, conquering ‘the swivel’ didn’t mean the work of technology providers was done.
To keep up with these challenges, many new specialist providers entered the scene. These vendors offered quality solutions that could not be ignored. However, incorporating these innovative tools into existing workflows often proved to be difficult, as did managing the additional overhead and vendor relationships.
In recent years, enterprising investment management technology providers began to look beyond the traditional OMS, EMS, and accounting workflows to discover where else users were ‘swiveling,’ including among these specialist solutions, and how they could better serve them.
The Best of Both Worlds: Configurable and Flexible Solutions
To do so most effectively, the industry was forced to address two of its most fundamental technology dichotomies – custom vs. standardized and best-of-breed vs. all-in-one.
Custom vs. Standardized
Custom solutions can come with many downsides, from difficult-to-test workflows to costly upgrades. At the same time, lack of customization creates process inefficiencies and workarounds that can be error-prone or time-consuming. Additionally, such rigidity hinders the elasticity and flexibility firms need to scale technology as they grow.
Best-of-breed vs. All-in-one
Simply piecing together best-of-breed solutions can be clunky, failing to meet managers’ standards for a seamless user experience. However, that’s not to say the future of investment technology is only “all-in-one” platforms. Too often, “all-in-one" starts to feel like “one-size-fits-all," which can be limiting if it’s too standardized and lacks the ability to add components where necessary.
In each of these debates, the pendulum has swung from one side to the other and come to rest somewhere in the middle. To meet the ever-growing demands of investment firms, the best technology providers combined the winning characteristics of each to develop systems with easy-to-configure but custom-feeling workflows and a seamless user experience with the option to add components as firms' businesses grow.
A New Frontier of Investment Management Solutions: The Rise of Interoperability and The Investment Ecosystem
This brought us to a new era of investment technology – the Era of the Investment Ecosystem.
The increasing popularity of cloud, microservice, and API (Application Programming Interface) technology over the past several years has given vendors the tools they need to create tighter workflows and do so in a way that is cost-effective and secure. This has taken the flexibility and configurability of the previous era to the next level and delivered new, innovative ways for firms to tie together workflows across more systems and partners into a seamless end-to-end experience.
What is an investment ecosystem?
Using modern cloud, microservice, and API technologies, investment managers can tie together workflows across more systems and partners in a seamless end-to-end experience in an infrastructure model known as an investment ecosystem.
Technology Enabling the Investment Ecosystem
Let’s take a closer look at the technology enabling this new era of investment technology.
Ecosystem Model Benefits: Collaboration, Efficiency, and Agility
Since the start of this era, certain clear benefits have emerged, and we foresee these benefits only continuing to grow in the coming years:
Enhanced Firm and Industry Collaboration
The interconnectivity of an investment ecosystem creates new and enhanced channels of communication among traders, portfolio managers, and other members of the firm, enhancing how processes run and opening the door to greater collaboration and innovation. It also offers better access to external counterparties, introducing new ways to work with vendors, partners, brokers, and peers. This enhanced flow of ideas will only intensify the industry’s already rapidly evolving nature.
Easy Access to Specialized Solutions
With the many challenges facing investment managers, there are a tremendous number of skilled providers designing exceptional, specialized tools that can’t and shouldn’t be overlooked. In an investment ecosystem, these tools are easier to implement than ever before – some with the simple touch of a button and without ever leaving existing applications.
Simplified Operational Framework and Lower TCO
The ability to do so can also help firms simplify their operational landscapes and underlying technology stacks and reduce costs by rationalizing the number of outsourcing relationships they must manage.
Decreased Risk
More standardized and easy-to-enable partnerships and tighter connections mean less risk for firms. These connections allow for a more holistic approach to compliance and regulatory requirements, allowing firms to stay on top of changes or potential problems at every stage of the trade lifecycle and adjust accordingly. This benefit is passed on to and recognized by today’s risk-conscious investors.
Time Savings
Time once spent going back and forth with vendors about integrations or custom work can be reallocated to higher-impact tasks. And, although the best vendors will continue to offer gold-standard service and support, managers will be empowered with the flexibility to mix and match the front end of their platform without the need for development or changing code, giving them more control over their operations than ever before.
Improved Differentiation
With the ability to quickly and easily customize interfaces to fit the workflows, challenges, preferences, and priorities of each firm, no two ecosystems will look alike, allowing managers to dive deeper and better execute their key differentiators.
Better Insights and Data
With increased interoperability comes better and more complete data, painting a more cohesive and holistic picture of the firm that managers can use to make better decisions and be most effective.
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Designing Your Investment Ecosystem
When we talk to firms about new technology or technology models, we sometimes hear, "That's great, but what does it look like in real life, and how can it actually benefit my firm?”
When it comes to the investment ecosystem, firms may wonder just how they can balance configurability with customization or achieve a seamless user experience while retaining the option to add components they grow.
To help you get a better idea of what this model looks like in practice, below are some examples of how firms are building their investment ecosystems by leveraging technology, data, and service solutions.
The Investment Ecosystem in Practice: Technology, Data, and Service
Firms today are facing no shortage of headwinds. As the market evolves and firms face new challenges, they are seeking new ways to extend their investment ecosystem to find solutions quickly.
As we’ve mentioned, leveraging the investment ecosystem model, some technology providers have been able to make seamless, secure access to new solutions available faster and easier than ever before.
At SS&C, we call this our Marketplace. Eze Marketplace provides plug-and-play access to tools like TCA, reporting, treasury management, and regulatory compliance from SS&C and other trusted partners. With Eze Marketplace, firms can discover and add pre-qualified solutions directly from their Eze platform and start using them almost instantly, saving time on vendor evaluation and due diligence and minimizing risk.
An open architecture can also allow firms to tap into more robust solutions as they grow and scale.
SS&C Eze examples include Eze OMS’s ecosystem integrations with Advent’s award-winning accounting solution, Geneva, and SS&C’s robust risk platform, Algorithmics. With access to such advanced solutions as they grow, firms not only have the ability to scale up as needed, but they also future-proof their technology investment.
Although firms understand the importance of data in their investment operations and decisions, managing that data and effectively incorporating it into their processes can pose a challenge.
The seamless solutions facilitated by the investment ecosystem leverage real-time data-sharing architecture, which enables firms to better harness the power of data across more systems and capabilities.
Furthermore, firms can use the APIs characteristic of the investment ecosystem to access and streamline external data, like reference or market intelligence data from financial data providers.
The ecosystem model also enables firms to quickly onboard data and the specialist tools they need to make their data work for them.
With SS&C Data Lens, firms can access investment and alternative data sets on demand. This centralized data solution simplifies a historically arduous process and rationalizes costs by allowing firms to only pay for the data they need and by removing the need for additional data infrastructure and staff.
Examples of specialist tools firms take advantage of to manage their data better include fixed-income solutions with built-in analytics and data specific to the bond market and AI data analytics tools for helping identify opportunities or risks. At SS&C, Eze technology users can access such tools within their existing technology platforms through Eze Marketplace, giving them the flexibility to tap into new tools as their asset classes and strategies change.
Technology and data aren’t the only ways to build an investment ecosystem.
As firms contend with fee pressure brought on by competition from low-cost, passive ETFs, many look to expand the footprint of their firms without adding headcount or overhead. One way they’re doing this is by tapping into the outsourced and co-sourced solutions available from their investment technology providers.
For example, one Asia-based firm saves 4 to 5 hours each day on reconciliation and reporting with Eze Managed Services. The accounting and operations professionals that make up this team act as an extension of the firm’s investment operations. They work directly within the firm’s existing investment ecosystem, providing full visibility into all activities as they happen.
Selecting a Partner You Can Trust: Open Technology, Risk, and Security
Although this new era of investment technology offers many exciting benefits for firms, it doesn’t come without associated risks. The more open technology becomes, the more important risk and security and validating these practices is.
As you select a provider with which to build your investment ecosystem, ensure you pick one that uses the gold standard in cybersecurity, that is operationally resilient, and that has a long track record of investing in and providing quality services and solutions you can trust.
Your Provider’s Service Infrastructure and Investment
In the era of the investment ecosystem, the level of support your technology partners offer remains incredibly important. You don’t want to choose a provider only to realize the first time you need assistance that their support model consists of a centralized call center, where inquiries are passed from one overly specialized group to the next (and back) without any real resolution.
To ensure you’re selecting a technology ecosystem partner that offers a first-rate service experience, ask about their support infrastructure and how heavily they invest in these groups. The best service experience will come from a globally dispersed and well-equipped team of experts with the technology and industry know-how to solve any challenge you may face.
The Right Foundation to Build Your Investment Ecosystem
At SS&C, we invest more than $110mm annually across wealth and investment technology platforms to ensure we're always on the cutting edge of what's next for the investment management industry.
We’ve used this investment to enhance the interoperability of our platforms – introducing new, innovative ways to bring together the tools, data, and insights our clients need to run their firms into a single, seamless experience.
Additionally, Eze solutions are backed by rigorous risk and security controls and more than 500 service professionals globally.
If you’re looking for the right foundation on which to build your investment ecosystem, explore our solutions or speak to an investment ecosystem expert today to get started.
Enhance Your Firm’s Collaboration, Efficiency, and Agility
Build your investment ecosystem with SS&C.
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