To create a sustainable innovation and technology strategy, hedge funds need to focus.
Our data tells a compelling story: fund managers want to remain competitive and are investing into new technologies. And many are finding ways to apply their new capabilities across the enterprise. Yet most are still struggling to create a strong and sustainable strategy for applying technology to their business. Based on our experience, KPMG partners believe fund managers and executives should be focusing on the following five areas:
Articulating the vision: Creating competitive advantage from technology requires fund managers to have a long-term vision for how they want to change and a clear roadmap for implementing their strategy. This will require a keen ability to prioritize investments that deliver short-term benefits while leading towards a longer-term goal.
Setting the tone: Fund managers and executives will need to set the tone from the top if they hope to encourage technology adoption. Organizational inertia will need to be overcome and fund managers will need to see an incentive in adapting to new models and processes. At the same time, back and middle office functions will need to be encouraged to find new ways to improve efficiency and compliance.
Rethinking the operating model: As the pace of change quickens, fund managers need to continuously rethink their technology and their operating models to ensure they are taking full advantage of new innovations that help them remain best in class. While some ideas may not seem immediately applicable, understanding their place in your market will enable you to act proactively when required.
Improving access to data: Driving efficiency, reducing risk and enhancing compliance all require fund managers and executives to have reliable and timely data about their funds, their investors and their performance. Whether or not you use a data warehouse, the ability to access, manipulate and visualize data will be a key capability and competitive advantage going forward.
Focusing the investment: Fund managers and executives will need to develop a clear understanding of how they differentiate in the marketplace and then focus CapEx investments towards generating competitive advantage in those spaces. Non-core or non-value-adding capabilities should then be outsourced to providers better able to drive functional innovation.
A look at the challenges and opportunities that technology and innovation are creating in the hedge fund sector.