Technology has been the driver of efficiency and cost reduction across most value chains, capital markets and alternative asset management industry are no different.

Alternative asset management firms while being slow to get onto the digitalization bandwagon are increasingly realizing the changing dynamics in terms of customer expectation and personalization. Technology is having profound impact on how customers are acquired, served, and maintained. Ultimately, the firms that are able to assimilate new age technologies will have substantial advantage over others that don’t.

We have analyzed the technology touchpoints across the alternative asset management value chain, considering the leading technology disrupters namely Big Data, Advanced Analytics, Blockchain, Cloud, Customer Experience Technology, Intelligent Automation and API/Microservices (Figure 1).

Big Data

Big data has been instrumental in transforming how business decisions are taken in the alternative asset management area. Big data usage is even more critical given the lack of standardized and benchmarked market data across alternative asset classes. Analysis of alternative assets needs processing of data from various sources like social media, satellite imagery, news feeds (in different formats), and policy decisions (inputs varying from pdf inputs to voice recording). 

Advanced Analytics

Advanced analytics in alternative assets is a key capability to help differentiate the insights across the investment lifecycle. It will increasingly involve analysis of IoT data, images, patterns, sentiment/ intents, and voice/text data. While big data deals with the technologies to effectively capture the new data sources and enrich the data, advanced analytics applies advanced algorithms to create actionable insights from this aggregated data. 

Blockchain

Blockchain has been around for quite some time now but the acceptance of blockchain in capital markets space has been limited primarily due to the complex web of stakeholders and participating entities. To make blockchain effective, all parties need to agree and be on a common blockchain platform, which is often not feasible.

In alternative asset management, the scenario is a bit different and since the settlement involves lesser parties (absence of complex clearing house, central custodians) the acceptance of blockchain would be high. 

Cloud

Cloud technology is more of hygiene rather than being a differentiator for businesses today. The advantage of cloud has been effectively re-established during the COVID-19 crisis like never before. The private equity and alternative assets industry has its own challenges with legacy technologies and manual processes. Hence, cloud provides an opportunity to transform and adopt new SaaS based offerings. 

Customer Experience

Alternative asset management firms have long underinvested in technology that enables user experience for investors. Given the long timeframe for most of these investments, the limited focus in the early years may well be justified. With mainstream asset managers entering the space, and the size of assets and revenue share increasing, customer expectations will need to be met as there is more at stake.

Intelligent Automation

Robotics Process Automation (RPA) has been used extensively in most industries for automation of repeatable tasks or supplementing human labor. RPA combined with AI takes the capability to the next level with the ability to now go beyond human performance indicators by leveraging the insights generated through AI, and executing and orchestrating the decisions with RPA. Alternative asset managers will do well to build Intelligent automation into their business processes. 

API and Microservices

Microservices and API oriented architecture is an enhancement on service oriented architecture. API/microservices touch all aspects of value chains across industries helping to build more robust, scalable and loosely coupled solutions.

Investing in technology for great returns

Alternative asset management segment has been playing a prominent role in the investment management industry. Increased number of investors are exploring different asset classes and investment avenues under this segment. Players are strategically reviewing their business, operations and growth capabilities, and ways to meet ever-increased investor expectations and regulatory requirements. Investment in technology is taking top priority.

Industry growth will be elusive if firms ignore leveraging advanced technologies as investors’ expectations and industry requirements rapidly change. The industry will require enhanced user experience, agility and effective risk management to effectively win over the demanding customer base, and technology will be the enabler.

Pradeep Agarwal

Wipro Insights Team Lead - Securities and Capital Markets

Pradeep has over 12 years of experience in financial services sector having worked with EY, HSBC Investment Banking and Guggenheim Transparent Value, prior to joining Wipro. Pradeep is skilled at performing sector research, forming go to market strategies, capital advisory, M&A origination and execution. You can reach him at pradeep.agarwal2@wipro.com

Arun Sharma

Solution Design Consultant - Securities and Capital Markets

Arun works on developing relevant solutions/response designs for the technology proposals in the capital markets industry. He has completed his management degree from IIM Udaipur with specialization in the area of finance and strategy. He is a certified Financial Risk Manager Level 1 conducted by Global Association of Risk Professionals. He can be reached at arun.sharma23@wipro.com

Swarnabha Seth

Solution Design Lead - Securities and Capital Markets

Swarnabha has more than 14 years of experience across solution development, consulting and sales strategy. He has deep technology understanding in digital space and has been instrumental in shaping large outcomes in banking, insurance and financial services domain. You can reach him at swarnabha.seth@wipro.com