What trends are getting underway that people may not know about but will be important?

The new SEC Private Fund Rule will start to have an impact in 2024.We will see more visibly the convergence of private and public markets that some have predicted. As private funds come under scrutiny, their current risk and regulatory systems will be tested, as many are not setup to process the volume of data needed to comply with the new reporting requirements.

With investors continuing to demand risk assessments of their private assets, managers will continue to face pressure to be more transparent in areas such as allocation strategies, monitoring, and due diligence. The SEC’s Private Fund Rule is just a start, and we anticipate further reforms, including other alternative regimes and regulations such as UCITS/AIFMD, money market fund reform, and liquidity and risk reporting.

What are your expectations for 2024?

We will see accelerated vendor consolidation. Everything we’re hearing from clients suggests they want to outsource more services and do so with fewer partners. With appropriate vendor due diligence, investment firms will look to vendors who can provide integrated end-to-end platform capabilities that can scale with growth and adapt to evolving regulatory demands.

Confluence launched the first Large Language Model (LLM) AI application, Rex, this year to address the increasing complexity of reconciliations among financial and regulatory reports. Tasks that usually require heavy manual labor, such as gathering, analyzing, and ensuring consistency of regulatory reports, can be done much quicker and accurately through AI. For 2024, AI capabilities will continue to proliferate across the asset management industry. Yet, it’s the use cases where there is a high level of unstructured data, currently a significant pain point when it comes to investor communications and regulatory reporting, where we’ll see the most significant opportunity for GenAI and LLMs to improve efficiency and the client experience.

What are your customers’ pain points and how have they changed from 1 year ago?

The pain points are the same, but what is different is that there is a lot more clarity. This time last year, we knew there were a lot of proposals on the regulatory table, but many were still to be finalized. The SEC has been busy. Firms want partners who can provide end-to-end platforms to meet a diverse set of challenges posed by these new regulations and any new regs coming down the pike.They need partners who have robust data management capabilities with structured and unstructured data, who are at the leading edge of new technology such as AI, and who can provide multiple capabilities, including data, analytics, and reporting.