Asset Service Providers: Opportunities and Challenges

Date: April 26, 2018



What are asset managers looking for from their ASPs when it comes to outsourced middle office functions?

AP: Ultimately, what asset managers are looking for from their ASPs is to reduce their operational cost. The reason they are doing that is because the asset managers are under pressure through passive investing. Like any business they then look at their operational costs to save money and they can do that by outsourcing to a service provider. It is imperative though that the asset service provider is able to provide a transparent, flexible, reliable service so the client can return to investing money as their principal function, making money for their clients, and returning to profitability.

What opportunities do you think ASPs have today when it comes to the middle office?

AP: When it comes to outsourcing the middle office, the growth opportunity for ASPs today is by offering enhanced data management services. If ASPs are able to choose the right technology and be able to produce scalable, reliable services it can become the smart choice for asset managers to outsource non-core middle office functions to the ASP.

What are the biggest challenges you hear when speaking to ASPs?

AP: When we speak to asset service providers, we hear that their biggest challenge is centered around data management. Asset service providers have a huge amount of data– they have the accounting data, the trading data, they have market data, such as benchmarks, pricing, corporate actions. To offer an efficient service the ASPs therefore must store that data once, they must clean it once, they must process it once, distribute it once, that way they will offer great service to their asset manager clients.

How do you feel technology can benefit ASP solutions?

AP: I feel like technology is key if asset service providers are going to meet their objectives and win. ASPs have the challenge around data management and there’s been significant technological advancements via data lakes and also around APIs that connect data lakes and data stores together, which enable people to consume the data in a much more efficient way and when there is  collaboration of those systems, be it third party or with the ASPs themselves, the client ends up having a fantastic service.

How can ASPs achieve both scale and flexibility?

AP: ASPs can achieve both scale and flexibility by choosing the right technology, be that building in house and or choosing the right third party partners. It is imperative they do that to ensure that they can offer the economies of scale to their asset managers and therefore offer a better service. They can do that for the scale with cloud native applications that allow for a elastic, burstable computing power. This allows for lots and lots of data to be calculated very, very quickly, thus providing a great service. And it also allows for visualization to be customized at the end client, allowing the asset manager to create their own views, see the data they want when they want, how they want via a very customizable dashboard. Flexibility is also very, very important. The underlying client, the asset manager, wants to be able to be in control of their data– they don’t want to have that dictated to them by anyone, so flexibility is important at the front end for the asset manager.