NextGen Investment and Accounting Operations: Envisaging Future Solutions and the Case for Change
Celent examines the future characteristics of next generation accounting solutions, the case for change and vendors that are reshaping the frontiers for insurance, investment management and wealth management firms
New requirements spanning multiple regulatory, tax, and accounting regimes— nuanced by strategy, fund type, investor segment and asset class— are resulting in more onerous efforts for data collection and aggregation to validate and reconcile investment data on a continuous basis.
Insurers and investment management firms are looking to make decisions to optimize their portfolios—increasingly cognizant of solvency/capital requirements, constraints on taxes, and realized P&L under different tax and accounting rules. Layered against business ambitions and increasingly challenging market conditions, firms continue to seek ways to drive efficiencies and improve costs associated with middle and back office operations, such as investment accounting, in order to underpin growth and sustain profitability. With dated technology and legacy operations, however, investment and accounting operations can present problematic barriers to new product development and geographical expansion efforts in terms of agility, speed-to-market, and flexibility to change.
In recent years, next-generation technology solutions and availability of ‘at-scale' sourcing options for the buyside have expanded, with managed services, hosted solutions, and outsourcing becoming more mainstream. Shifting end-user demands toward fewer strategic vendor relationships will pressure vendors to connect more broadly with other providers in the value chain and to form/extend partnerships in order to pre-package and pre-bundle their offerings in conjunction with others (e.g., for esoteric asset pricing models, conventional and alternative datasets, news/sentiment, AI-powered analytics). Here, modularization enables the unbundling/rebundling of products/services, and interoperability (e.g., through microservices, Open APIs) can help facilitate collaborative partnerships, by employing modularized offerings to create new propositions and innovations.
In the coming years, Celent expects that modern investment accounting and portfolio solutions will enable investment firms to achieve a harmonized coverage of their entire portfolio, real time transparency, and stronger analytical prowess; undergirded by collaborative workflows and dynamic end-user / persona-based customizations, but at a lower total cost of ownership (TCO).
Investment accounting is representative of an area ripe for disruption and in this study, we examine the future characteristics of next generation solutions and the case for change for insurance, investment management and wealth management firms. Celent also provides insights into vendors and solution providers that are reshaping the landscape and frontiers in this space.
To learn more about how investment management firms are upgrading their operations, please contact Celent for more information on our latest reports on these topics (subscribers can link through to the full reports):