A view to the future of investment operations
Blockchain, artificial intelligence, robotics, automated data entry and data mining are some of the big technological trends set to radically disrupt the way the back-office teams of superannuation funds and their service providers do their jobs in the not-too-distant future.
The onslaught of change confronting investment operations teams is not limited to technology, though. The shift in assets to the deaccumulation phase, mergers, growth in funds under management and unrelenting regulatory changes are forcing industry players to make serious decisions about what to prioritise.
Investment operations refers to all the cogs of the financial services machinery, and covers areas such as the implementation of investment transactions, performance reporting, analytics, fund administration, custodial services and operational due diligence.
At the 20th Conexus Financial Investment Operations Conference, in February, two pioneers of the industry were recognised with a Lifetime Achievement Award. The recipients were Sunsuper chief investment operations officer Lounarda David and NAB Asset Servicing associate director, client relationships, Ravnol ‘Rav’ Gray.
David and Gray spoke to Investment Magazine about the changes they’ve witnessed in the investment operations industry over the first 25 years of compulsory super and shared their predictions for the decades ahead.
Given their track records it would be wise to listen. Both got their start in superannuation investment operations, then a cottage industry, prior to the establishment of the Australian Prudential Regulation Authority (APRA), at a time before smartphones, when most back-office functions were done on paper.
In 1995, the year APRA was established, the total superannuation pool was worth less than $231 billion. Today, the sector is worth roughly 10 times that, regulation is multifold, and funds are under pressure to provide sophisticated digital and mobile services to their members.
Looking ahead, both David and Gray predict the coming 20 years will bring even more change than the previous two decades. “Dealing with regulatory change, while dealing with fund growth, whilst dealing with volatility and technology transformation, and supporting fund members by trying to get fund products to them faster and better to support them in retirement – it is beyond juggling,” David says.
Ongoing technological innovation
The phenomenal growth of the super sector to $2.1 trillion means investment operations teams need to be more proactive and innovative on the back end, so the front office can deliver.
A major component of this is managing greater volumes and varieties of data, at faster velocities.
Growing investment teams need different support from the back office, particularly in relation to data, and the ability to cut and splice it into new, informative formats.
“That means the custodians and administrators need to [have] their systems in real time, so they can cater for all the needs of the analysts,” Gray explains.
Reports from Deloitte and McKinsey & Company predict that automation using artificial intelligence – also known as intelligent automation – might be the next big game changer in terms of process efficiency.
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Source: A view to the future of investment operations – Investment Magazine