(Pictured: Rhys Octigan)
As the systems they provide are changing with each technological advance, so too are the systems providers’ roles. A recent trend by big users of investment administration software overseas for instance, is for the provider to also host the data.
According to Rhys Octigan, head of business development, Australia and New Zealand, for DST Global Solutions, data security and the desire to increase operational efficiency by leveraging vendor expertise are driving the trend for third-party hosting. “DST is seeing increased interest for hosting services,” he says. “It’s not just about software models anymore.”
One of the possible implications of DST hosting the data for sizeable buy-side institutions is that the extra scale may enable the firm to offer its ubiquitous HiPortfolio investment accounting and asset servicing system to the smaller end of the market.
HiPortfolio was first developed in Australia in the 1980s and has developed through continuous R&D since. It now has more than 120 clients – mainly fund managers, insurance funds and custodian banks – in about 25 countries.
“I can see HiPortfolio moving to a ‘management by exception’ model” Octigan says. “This is where operational teams are triggered to respond to events when they are alerted to exceptions in their operational and investment data. This is a more efficient way of operating, especially as the complexity and volume of data increases. They only need to get involved in the exception.”
This is part of a larger trend where the software provider becomes an outsource partner, which effectively frees up more time and focus for the investment operation to concentrate on core activities, just as the automation and straight-through-processing of the systems have freed up more time.
Over the past few years, DST has complemented HiPortfolio with its middle-office system Anova, for investment data management and analytics. Anova is a suite of products which provide data aggregation, performance measurement and attribution, post-trade compliance, APRA regulatory reporting and position keeping including maintaining an Investment Book of Record (IBOR).
Octigan says that the take-up of Anova globally has been impressive, such that DST is working with an array of investment accounting and other upstream and downstream systems. While Anova and HiPortfolio integrate together, about three-quarters of its clients are not HiPortfolio users.
Its recent successes in Australia have been helped along by increased regulatory reporting mandated by APRA. This includes reporting on more than 4,000 data items including ‘look through’ of fund data on underlying investments.
“We have been providing the ability to ‘look through’ data for US clients for more than 10 years,” Octigan says. “So, Anova in Australia is a good fit for end-to-end APRA reporting. More broadly, it helps firms interpret, analyse and report everyday client data for more insightful decision making.
Anova can also be white-labelled for custodians and third party administrators, many of whom want their customers, such as other fund managers, to self-serve as much as possible.
Octigan says that there is a growing appreciation among super funds and managers that, given that they have to collect and report on more data to satisfy regulatory mandates, they should also make the most of it and use that information to improve their client service offerings.