13 June 2024 – There are several factors that are influencing the demand for technology support in the alternative investment fund segment. Objectway's experts help us identify them and understand their challenges and potential to meet the needs of operators.
The demand for technological support from asset managers and financial intermediaries operating in the alternative investment funds (AIF) segment is being reshaped by some important factors that see technology as their common thread.
There are four that have the greatest influence: diversification of the business, opening up of investments to individual customers, increasing the weight of regulations and strengthening operations. Gianbattista Geroldi and Paolo Bonacina, respectively CEO Italy and BPO Service Operation Director of Objectway, a company that provides wealth, banking and asset management services at a global level, talk about it to We Wealth readers.
The 4 trends that are changing the AIF market
The first trend that is playing a crucial role in the development of alternative investment funds is that of business diversification. "More and more operators," explains Geroldi, "are embracing a multi-asset logic, integrating different asset classes into their strategies, each with its own unique operating characteristics. Technology solution providers need to support this change both in terms of platforms and tools as well as specific skills."
The second is the expansion of the customer segments that access investments in alternative assets. "AIFs have increasingly opened up to individual clients and managers will gradually have to interface no longer with a few dozen institutional investors but with thousands of individual investors. Technology solution providers can support this market opening through solutions that scale the business of managers to meet the growing demand of this new segment," he continues.
The third trend is identified in the increasingly important weight played by regulatory compliance, both at national and European level. "It is not wrong to say that it was also the strength of regulatory obligations that led to an important evolution in the role of technology and the perception that financial operators have of technology solution providers such as Objectway." Legislators and supervisory bodies, in fact, require an ever-increasing and detailed volume of information: from customer due diligence to anti-money laundering control procedures, technology represents not only a valid ally, but a real enabler that can turn a burden into an opportunity. "More information to be collected also means more information to be put at the service of the business: with respect to this aspect, technology plays a crucial role in the collection, use and transmission of data," adds Geroldi.
The last trend, which is both a consequence and a complement to the other three, is that of strengthening operations in business management.
Integration and innovation to serve change
When it comes to AIFs, it should be remembered that the high diversification offered by alternative instruments corresponds to an equally high degree of complexity in their management. "Asset management companies," explains Bonacina, "often find themselves having to administer very different assets at the same time (just think of the difference between a trade credit and a property), each subject to precise regulatory obligations of an informational, regulatory, tax and accounting nature. All this causes a considerable expenditure of time, money and human capital. In this sense, technological support is essential, because it can automate all those low value-added tasks that take time and resources away from professionals. In this way, the latter are given the opportunity to focus more on the most strategic operations, favouring a more agile and dynamic management, which makes the procedures between asset management companies, authorities and investors more efficient and faster".
"We believe that technology works well when you cannot see it. For this reason, the user experience must be as intuitive as possible for both operators and investors, even more so when it comes to complex assets such as AIFs. All this is not possible without extensive experience in managing all aspects of digitalisation, and without the ability to assist the asset manager with organisation, structure, flexibility and technological skills," adds Bonacina.
Objectway's support for AIF managers and intermediaries
Objectway offers its solutions in both Software as a Service (SaaS) and Business Process as a Service (BPaaS) modes, covering and supporting the entire private market value chain. To do this, the company constantly invests in innovation, technological enhancement, digitalisation, process automation, so as to meet all customer needs.
"We believe that technology can help bring the investor closer to investing, and this is even more true in the case of AIFs," explains Geroldi. The positive trend for alternative investment funds, in fact, largely depends on the market's need to bridge the gap between traditional and alternative investments. Strategic partners such as Objectway have the task of providing useful tools to provide managers with the solutions and digital platforms necessary to facilitate two-way communication with partner companies and customers. Especially for the latter, in fact, greater communication means greater clarity and therefore greater trust."
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