Two, outline and verify all development requirements, dependencies, associated costs, and timelines to develop are formalized and mutually agreed in order to meet assumed live date commitments and budget.
Three, level-set service plan requirements ensuring appropriate service level agreements (SLAs) and service guidelines with key performance indicators (KPIs) are in place before the live date.
Four, plan for appropriate day two items and confirm that a path towards business as usual is included in the plan and budget.
Lastly, establish formalized ongoing vendor oversight to help these long-term relationships remain healthy post transition.
Hortz: Can you please give us a brief case study example that illustrates how outsourcing your middle-office can support different firms’ needs or goals?
Wahmann: Market surveys find that key common elements that lead managers towards outsourcing their middle office are gaining operating efficiency and eased access to normalized data.
A recent case study of ours relates to post-execution trade settlement support. As markets have evolved recently with the onset of regulatory changes such as the Central Securities Depositories Regulation (CSDR) and tightening settlement windows in many markets, investment managers now need more than ever to be streamlined in their trade matching, instruction messaging, and their exception management models. These now have added importance to help managers from encountering financial penalties as a result of failed or delayed trading activity.
An outsourced trade settlement operating model with access to real-time trade status data now allows investment managers to leverage our technology and data platform utilizing provider agnostic API connectivity, machine learning, and custodian bank transparency via real-time status across all aspects of the platform. Outsourcing the ability to leverage our technology has allowed these managers to significantly shift the roles of their human capital from manual data gathering and operational activities, while also sunsetting costly third party and/or legacy internal technology, to focusing more on their core investment products, strategy, and client engagement.
Hortz: What advice can you offer to financial firms on how best to respond to this environment of accelerating business and cultural change they are now operating in?
Wahmann: Investment operations models are in constant change, impacted both by asks from firm stakeholders and the external marketplace. There are growing opportunities to partner with service providers for outsourcing options and Fintechs offering their newest technology offerings. Asset managers must have an open mind, now more than ever, to the wide range of solutions that may meet their evolving needs.
Firms need to take a forward thinking, long-term, strategic view on their operating model verses a tactical approach to closing immediate gaps. Consider vendors and providers under your review as strategic partners versus vendors, with common long-term objectives and strategy.
Secondly, be open minded to all potential solutions. Service providers, and especially the wide range of new Fintechs in the market, are continually offering new options aligned to both investment manager’s operational and data needs for the future. A firm's operational model can also include multi-provider and hybrid approaches and your partners should be willing and able to connect and interface with each other to support your consolidated needs.