Monday, December 11, 2017 UTC
Analysis > Analysis and Strategy

The 3 Pan-African trends driving asset manager technology take up

Mats Berggren, Vice President, EMEA & APAC, SS&C Advent
Nov. 21, 2017, 9:54 p.m.
183

Word count: 811

Africa’s funds industry may not have the scale or scope of those in North America or Europe (yet). But the markets are dynamic and evolving rapidly. To keep pace, asset managers will have to evolve too. And one key area of focus must be the efficiency and sophistication of their operational infrastructures.

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Africa’s funds industry may not have the scale or scope of those in North America or Europe (yet). But the markets are dynamic and evolving rapidly. To keep pace, asset managers will have to evolve too. And one key area of focus must be the efficiency and sophistication of their operational infrastructures.

Traditionally, most asset managers have relied on a combination of legacy systems, some Excel workarounds and a heavy dose of manual processing. Such inefficient and error prone set ups are no longer fit-for-purpose in the modern era. 

Instead, three major trends are driving the need for more robust yet flexible systems that can deliver a truly automated and streamlined operating environment.

Regulation
The adoption of tighter regulatory standards is a feature of markets across the continent, forcing firms to revamp their systems and processes as they struggle to comply.

In South Africa, for example, the Collective Investment Schemes Control Act (CISCA) was broadened in 2015 to encompass both retail and qualified investor hedge funds. As a result, essentially every collective investment fund in South Africa now falls under the regulation. 

CISCA is even stricter than the European Union’s UCITS regime—with significant restrictions on the asset classes in which a CIS can invest (e.g. derivatives may only be used for limited hedging purposes), and concentration limits on CIS portfolio exposures. CIS managers’ must also be approved and regulated.

Investor demands 
Across Africa, investors—especially institutional investors—are intensifying their demands on fund managers. 

Foreign exchange is one area. Ongoing currency volatility means investors are keen to invest in harder currencies. Many fund managers are now offering clients that capability. But it requires advanced systems that can manage FX, cope with any exchange controls, and provide clients with accurate information on their foreign holdings.

Institutional investors’ reporting requirements and demands for transparency are also becoming ever more sophisticated, as they seek to better analyse their investments, and understand what asset exposures and risks are in their portfolios—a trend exacerbated by the collapse and subsequent bailout of African Bank Investments (Abil), which served as a massive transparency wake-up call. Creating and delivering the necessary level of high quality, detailed and timely client and regulatory reporting has become impossible though for firms that depend on Excel for their reporting needs.

Investors’ transparency and reporting demands are becoming more pronounced too as they broaden their allocations to alternative assets in the search for returns and better liability matching. For instance, South Africa’s Public Investment Corporation can now invest up to 25% of its portfolio in alternatives. Three years ago it was just 5%. Real estate investment in particular has seen massive growth across all of Africa. 

But asset managers’ efforts to expand their offerings to invest in different instruments, asset classes, countries and currencies is outstripping their legacy systems’ capabilities, compelling them to seek out more functionality-rich, automated solutions.

Scalability 
A ready supply of cheap labour previously enabled many asset managers to rely on manpower to support their operational processes. However, as the labour force has become more educated and better paid, and as asset volumes continue to grow, investment firms are finding it is no longer economic to throw bodies at their processes. 

No organisation can scale its business effectively if every time it grows its assets it must increase its staff commensurately. Instead, as many asset managers across the continent have discovered, the only answer to sustainable growth is to automate their activities. 

Ready solutions
Fortunately, asset management organisations don’t have to tackle these operational challenges alone. Tried and tested solutions are readily available to support the full range of asset managers’ front- to back-office activities, whatever their investment strategy, target markets or client base.

It is in these vital areas that SS&C Advent can help. By occupying the nexus between investment management and cutting-edge technology, we have been able to deliver ahead-of-the-curve solutions for more than 30 years, enabling our more than 4,500 clients around the world to streamline costs, minimise risk, meet their compliance obligations and grow their businesses. And as the industry evolves, we continue to commit significant R&D to new technology innovations designed to help investment managers thrive in this changing environment. Armed with the right technology, firms will then be better equipped to stand out from the crowd.
 

About the Author:

Mats Berggren joined SS&C Advent in 2001, and is now Vice President, EMEA and APAC, responsible for SS&C Advent’s continuous business growth within Europe, the Middle East, Africa and Asia Pacific. Prior to joining Advent, Mats Berggren served in senior sales roles at Front Capital Systems, a SunGard company, the IT Research company Gartner and also spent a number of years in the oil industry. Mr. Berggren holds a Master of Science degree in Economics and Marketing from Uppsala University in Sweden.
 

 

 

 

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