Building a Connected Investment Operations Ecosystem: Takeaways from InvestOps USA 2023

Mike Muniz, Partner and Chief Revenue Officer at Canoe Intelligence, recently participated in an innovation panel at InvestOps USA 2023. 

The March 29th session was titled “Building a connected investment operations ecosystem: How can you best engage your internal stakeholders to advance the pace of digital transformation to meet investor demands and deliver on company objectives?” Moderated by Gavin Little-Gill, Head of Investments & Securities at Aite-Novarica, the panelists discussed how to approach building out an investment operations ecosystem amongst the hundreds of different vendors and the priorities of varying stakeholders.

Panelists included Cihan Kasikara, SVP, Global Head of Investment Operations, American Century Investments; Tom Shea, Global Head of Middle Office, Manulife Investments; and Mahesh Narayan, Institutional Asset Managers Segment Head, Arcesium.

Questions the panel addressed a range of topics related to the connected investment operations ecosystem, such as:

• Tying together different vendor solutions and ensuring they’re aligned with the same vision
• Thinking about a tech stack when you have dozens or hundreds of custodians
• Future-proofing your operating model
• Building relationships with other partners to facilitate client goals
• Managing complexity when clients have differing priorities and processes lack standardization 

Below, we highlight comments and direct quotes from Mike’s participation on the panel.

On Collaboration Across Industry Partners

How can firms foster more productive relationships with third-party partners and drive improved transformational progress? Mike shared his thoughts on Canoe’s approach: “We view our clients as partners and make sure we build relationships where they view us as true partners as well. There are also partners that we establish within the ecosystem.” 

For investors and asset managers considering technology to support their goals, Mike continued:  “It’s important to understand your current and future tech stack’s ability to integrate with other providers, their perspective on that integration, their openness to doing so, their existing partnership engagements, etcetera.” 

To further evaluate this, Mike offered some questions to ask third-party providers:

• APIs: Do they have open API architecture?
• Connectivity: What other integrations have they built? Are there any active integrations with other third-parties?
• Roadmap and Plans: What does their roadmap look like? Is there a focus on third-party integrations?

“These are all really important things to understand as you build a connected ecosystem and architecture. In the alts space, where we play, the operational side of private market investments is very hard as a result of all these other complexities unique to the space.”

On the Challenges of Alts Operations

He also offered some examples of these complexities, such as:

• Document Overload: You make a commitment or you make a subscription, and all of a sudden, you’re flooded with all your valuation and transaction details, and documents are flowing everywhere.
• Access to Information: You’re tracking down portals and emails, managing disparate frequencies by asset classes: weekly, monthly, quarterly annually for documents. Moreover, your data is unstructured and locked up in PDFs.
• Organizing Information: You have to somehow harmonize all this information across different private asset classes and then alongside your public portfolio. 

Mike explained, using Canoe by way of example, how vendors can solve for these complexities through technology: “We’ve built our solution to address those challenges, and it is a tech-driven solution. But what we’ve found across our client base is that the most forward-thinking firms addressing these challenges, really anchor on three guiding principles.”

1. A high level of control and transparency: “Consolidating, centralizing, and controlling your process and your data is so important as it allows for very quick decision-making. With the SVB issue in March 2023, while many firms were dealing with fire drills, those firms that controlled their data and had a clear understanding of how they were positioned and exposed could take action quickly to mitigate risk.”
2. A commitment to technology efficiency: “Not just a commitment to technology but also a commitment to measuring the efficiencies you’re gaining from technology. How much time am I saving? How much money am I saving? Is my team more productive? Making sure you’re doing new and different things by having access to more data, constantly assessing those things, measuring, and then altering course – it allows you to really squeeze as much efficiency from technology as possible, which is what we’re all trying to do.” 
3. Purpose-built solutions: “We’ve mapped out a five-year plan to solve specific challenges. It’s not just about implementing technology, rather it’s about implementing solutions. In the private space, we’ve generally seen that generic technologies tend to fail because of the nuances and complexity. These firms are looking for industry experts who have leveraged their subject matter expertise to build practical solutions with really cool technology.”

“Ordinarily, automating away the friction related to data is really important because you can then start to focus on configuration and tailoring, not customization. But if you automate the resource allocation away from menial tasks and put them toward the activities that elevate reporting and provide a more tailored reporting experience for a given client, that’s the key.”

On the Importance of Data and a Connected Tech Stack

The discussion quickly transitioned to focus on data, prompted by questions about clients’ need to manage public and private investments separately. This part of the discussion arose from queries, such as:

• How are you seeing your applications being deployed within different client bases?
• How connected or siloed are they by asset class?
• How are you seeing alternative asset classes trend across clients?

In response, Mike explained the importance of data in driving connectivity and automation: “We are seeing a lot of centralized Snowflake or data warehousing applications, which can really drive workflows throughout the organization. Investment operations are really the connective tissue that binds an entire firm together.” 

“Data is such an important part of driving that connectivity, so we see a lot of centralized data lake and data warehouse applications for feeding client reporting processes, accounting and treasury workflows, risk exposure, analytics, etcetera. Data is really the lifeblood throughout the back, middle, and front offices of an investment firm, and Canoe is driving much of the automation critical to alternative data management.

“Unlike public markets, where you’ve got custodial fees and real-time data, we’re trying to create some of that same experience in the alts space. Where firms are implementing these centralized data warehouses, we get close to mimicking the feed-based approach in traditional liquid investments. You’ve got a whole bunch of documents and data coming into your ecosystem: we’re collecting, gathering, digitizing, and feeding that data into a central location that is standardized and normalized across all private asset classes, and offering it alongside public data as well. On the private side, we’re seeing a large portion of firms trying to figure out how to scale and manage their growing allocation in the space, as this trend is not slowing down.”

To conclude, Mike shared a final prompt with the audience: “Work backward from your ultimate future state: what are you trying to solve? Why does this matter? Who will it impact? And, what’s the best solution to address these questions?”

Canoe can help you determine how to achieve your ultimate future state. Request a demo to learn more about how we can transform your alternative investment document and data management workflows.