Buy-side firms are encountering many hindrances that could easily hinder their efforts to use technology for innovation.
Fund managers’ legacy systems
For example, a recent Financial News article delved into the data management difficulties some fund managers are encountering. Paul Mawson, head of investment management consulting at a major professional services firm, told the media outlet that many of these institutions are working with a collection of older systems that don’t work together properly.
These difficulties have grown worse in the last several years, as landmark reforms following the financial crisis have increased the need to upgrade existing systems. As a result of these initiatives, reporting requirements have increased, intensifying the demands placed on technological infrastructure. At the same time, the economic downturn crimped spending on IT, according to the news source.
“Most companies right now are focused on addressing their current technology challenge and in particular sorting out some of the data challenges they have around those legacy systems,” Mawson told the media outlet.
Benchmark data challenges
Another variable that could easily push buy-side firms to upgrade their existing IT systems is the growing demands associated with benchmark data use. Many clients are pushing these institutions to use a greater number of these measures when evaluating performance, as well as custom benchmarks, which place greater strain on the technological resources of buy-side firms.
Amid this situation, companies are putting their financial resources into maintaining existing systems instead of innovating, Dennis Rourke, partner at a leading investment bank, told Financial News. He emphasized that in the buy-side, many processes in the middle and back offices are outdated. Some pockets are in better shape, for example certain wealth managers. Regardless, opportunity still exists, Rourke pointed out.
Many ‘archaic systems’
“Given the number of archaic systems in the middle and back office, it is one area ripe for some very serious innovation,” he told the media outlet. “If that happens, it has the potential to significantly change the dynamics of a multi-hundred-billion-dollar business.”
However, some view the situation in a less optimistic manner. A company that provides cloud-based services to the buy-side discovered that some IT staff are concerned about major changes to their departments, according to the news source. Alternatively, fund managers need to be convinced of the benefits of certain technology, according to a company that provides behavioral data analytics.
If buy-side firms currently have a patchwork of legacy systems and are unsure how to best navigate their existing situation, one option they have is to obtain a comprehensive analysis of their IT infrastructure from RIMES Technologies.
By doing so, institutions can pinpoint weaknesses and bottlenecks, and determine the most efficient path to overcoming these difficulties.