What Intelligent Automation means for Alternative Investment Firms

Published: 28 June 2023

Alternative investment firms need to focus on providing investors with a faster, more personalized and friction-free customer experience. But at the same time turbulent economic times and ever-increasing regulatory reporting continue to burden investment managers. The pressure is building for more established firms to find new ways to stay ahead of the competition, even when working under legacy or outdated systems and processes.

Overall, there’s an underinvestment in digital transformation and an overreliance on using people to act as the glue to make clunky processes operate. And that work is supported by inefficient, manual tasks such as creating spreadsheets and handwritten documents.

With falling fees, rising debt and increasing customer expectations, technologies such as intelligent automation (IA) play a critical role in the future of alternative investments.

The alternative investments sector needs to adapt to the changing business landscape, and IA can help them grow, diversify, improve the investor experience, and become more agile.

Automation in Alternative Investment Management

Within alternative investments, there's a need to grow and diversify risk acquisition. However, organic growth for firms in this space seems a thing of the past, given the skills shortages for hard-to-fill roles such as research and data science. And although firms need to attract talented professionals, that’s not their only challenge.

Current challenges in Alternative Investments

New competition in the sector democratizes investment for new cohorts, pressuring firms to prove a better customer experience — an essential step for attracting new investors, such as the upcoming digital-born generation set to inherit significant sums from their baby boomer relatives.

Today, firms are increasingly adopting hybrid models for their products to stay ahead of the competition, mixing illiquid private market assets with more flexible investments. By combining a much larger market with more complex products and reporting, firms’ use of automation and artificial intelligence (AI) can avoid the need for investment in additional   and complex IT systems.

In summary, some of the challenges firms are facing include:

  • Higher interest rates
  • End of cheap borrowing
  • Increased regulation
  • More competition
  • Changing client expectations
  • Demand for lower fees
  • Optimization of portfolio value
  • Better auditability requirements
  • Environmental, social and governance (ESG) regulations
  • Emergence of cryptocurrencies

That’s a long list to contend with. So, how can intelligent automation help?

Finding solutions

To thrive in this ever-changing business landscape, firms require dynamic systems and a strong governance model. Automation can deliver this flexibility, but it should be implemented strategically, with automated processes extending beyond trading and foreign exchange.

For firms to truly optimize their entire operations they need to implement scalable automation across their enterprise, from front, middle and back-office work.

At SS&C Blue Prism, we look at total digital transformation through a broad lens that combines the goals of unifying the workforce, transforming journeys and scaling across the enterprise.

Moving Toward Total Transformation

Let’s start with a quick definition of intelligent automation (IA). IA is a broad concept of cognitive technologies routing in business process management (BPM), robotic process automation (RPA), machine learning (ML) and artificial intelligence (AI), among others.

IA deploys an intelligent digital workforce into your processes. Those digital workers are designed to identify and remove inefficiencies in your business operations, from slow turnaround times, lengthy handoffs and rework caused by manual processing errors.

By doing this, IA takes those tedious, manual tasks off the hands of employees so they can focus on higher-value, strategic work. Plus, with higher quality and faster output of services, customer experience (CX) also improves.

Unify the workforce

IA connects your human and digital workforce, enabling firms to always have the right resources for the right job.

Digital workers are trained to access the same systems as employees but operate 24/7 without breaks, minimizing handoffs and delays. They document their performance for improved transparency and auditability and can also loop people into their work where needed.

Furthermore, ML and AI-powered digital workers learn as they work, meaning they can take on work in growing complexity. For example, digital workers can integrate natural language processing (NLP) to handle simple customer inquiries via a chatbot.

In a constantly fluctuating market, IA’s adaptability and granular reporting are exactly what firms need to stay on top.

Transform journeys

IA transforms customer and employee journeys by connecting work at every level — from front, middle and back-office processes. IA eliminates functional silos, aligns work to business goals and reuses best practices and procedures for a more cohesive, standardized workflow.

Firms work in a lot of structured, repetitive manual tasks. And since digital workers operate without mistakes and much faster than their human counterparts, they’re perfectly programmed for these tasks. Think of it like this; rather than taking work from your employees, digital workers free them from tedious tasks so they can focus on decision-making and strategic initiatives.

For example, digital workers can fill out client data across multiple systems and perform background checks. This allows your people to focus on the customer. Plus, you can scale the volume of digital workers up and down to suit your changing workloads.

To take this further, your digital workers can use predictive AI technologies to anticipate future trends and build operational models to support emerging levers for growth, such as new investment products and services.

As the global skills shortages continue, firms must seriously consider adopting modern, technology-driven working practices to attract and retain the best employees and support a loyal customer base.

Scale enterprise-wide

As we said, IA works at every level to streamline your firm’s operations, from onboarding new clients quicker to filing documents and flagging forms with missing or incorrect information.

Specifically, firms can automate research, reconciliation, auditing and reporting processes for better compliance with industry regulations. IA provides keystroke-level auditability, empowering firms and agents with the confidence that their decisions are based on accurate, near-real-time data.

With the right automation platform, firms can build onto standalone projects to deliver strategic deployment of digital workers across their entire organization. The bottom line? IA empowers people, customers and companies.

How Can Intelligent Automation Add Value to Alternative Investment Management?

We’ve delved into the nitty gritty of IA technologies. Now let’s look at use-case examples of how IA can improve functions in the alternative investments sector:

  • Investor onboarding: Digital workers support your client services team to extract and process data from unstructured formats. For example, taking a handwritten subscription form and populating it into the correct systems.

With IA, onboarding time is reduced by up to 75%.

  • Reconciliations: Digital workers give firms up-to-date pictures of available investment funds and near real-time data transparency for senior leaders and clients.

With IA, documents are named and archived with 100% accuracy.

  • KYC and AML checks: Digital workers can validate new clients while maintaining regular KYC and AML checks, lifting the burden of periodic background checks from your compliance teams.

With IA, firms can achieve a 30%+ efficiency gain.

  • Regulatory and client reporting: Digital workers can source, access, ingest and display data to reduce the time to complete manual reports within a siloed system.

With IA, firms can improve turnaround times by 75%.

  • Investment research: Digital workers can source and gather information from online sources for analytics and insights, freeing up analyst and investment manager time for higher-value decision-making.

With IA, firms can collect 80% more data and data sources.

Best Practices for Implementing Intelligent Automation

There’s a strategy for implementing automation so it’s scalable across an organization. Firms should address the following in their business case when considering an intelligent automation program:

  • Senior management buy-in and commitment to adopting automation across the firm.
  • Taking a centralized or federalized approach to governing automation activities.
  • Establishing an automation-ready culture across your organization.

An organization goes through stages when adopting intelligent automation, which we call the ‘automation journey’. Following these steps will help make your automation robust, secure and scalable. So it’s easily deployed to other business processes when needed.

Four key stages of the automation journey

  1. Discover which processes to automate first: This can be done through process intelligence, which uses task and process mining to determine which areas are good first candidates for automation.
  2. Plan how you’ll remove bottlenecks: Using the insights gained from process intelligence, you can uncover and eliminate process inefficiencies so they’re easier to automate.
  3. Set business goals: Develop strategic outcomes, going into detail beyond time or cost savings. Use accurate and detailed reporting.
  4. Gain organization-wide buy-in: Initiate education and awareness programs to communicate the benefits of IA to everyone in the firm.

Finding the Next Target

For an effective IA program, your firm needs to think about continuous improvement and innovation. Your business goals should be a moving target of constant progression.

The next stage alternative investors will be looking at, is how they can align their use of IA with their business growth goals.

The volume and complexity of data across multiple asset classes, along with new levels of analytics and transparency requirements, can no longer be accomplished by humans alone. A digital workforce can transform how alternative investment managers respond to the changing market.

Want to read more about how RPA and IA can transform the alternative investments sector? Download our free e-book: https://landing.blueprism.com/private-markets