Asset servicing: How a new outsourcing model is helping buy-side rise above competition
The increasingly complex marketplace is pressurising asset managers to reduce costs and improve efficiencies. Léonard Ollier explains how managers can fully equip their needs by outsourcing their front-to-back office.
What new challenges are asset managers having to grapple with due to regulatory requirements and cost pressures?
Asset managers are facing an increasing number of complexities in the marketplace as both clients and regulators demand more reporting, monitoring, transparency and audit trails. Access to this marketplace has become more complicated, which makes it difficult to source liquidity, ensure best execution across the board and gather complete data on all instruments.
In order to survive, asset managers must be more efficient and invest in powerful and sophisticated tools and processes, which can be expensive to access and difficult to implement or maintain. This poses a conundrum for managers as they are under pressure to reduce fixed and structural costs as competition has never been higher. This means they need to focus on what brings value to their company – namely client relationships, fundraising and efficient management.
How is this changing what solutions asset managers require from asset servicers?
The above-mentioned challenges have increased the need for asset managers to outsource complete management tools that support operations across the front, middle and back offices. In the past, asset servicers typically only provided post-market solutions, such as custodyand fund administration, but asset managers are now looking to them to provide full implementation and management of these tools to reduce pressure on internal resources and save on costs.
Therefore, asset servicers are opening their internal setup to external clients by covering sectors beyond just back-office services. In many cases, they are expanding their middle office offering for large players. However, these do not cover the entire value chain.
How can SGSS’s Crosswise outsourcing solution help asset managers?
Through SGSS’s partnership with SimCorp, which provides its SimCorp Dimension software to around 45% of the top 100 financial institutions in Europe1, Crosswisecan fully equip an asset manager’s needs across front, middle and back offices through one single tool. It is effectively a management tool for all stages of order processing, trading, middle office reconciliation, custody and record keeping.
By providing buy-side clients with tools to give them visibility and help them make investment decisions, managers and decision-makers are then able to focus on the areas where they can add true value.
How does Crosswise differ to other asset servicers’ solutions?
Using a provider that has a long track record and who is also backed by a large bank is hugely beneficial to mid-sized fund managers, as it allows them to have access to a one-stop-shop. SGSS is a business unit of the global bank Societe Generale, which provides a holistic range of services to the buy side. All too often, banks or asset servicers operating their own internal tools decide to open them to external clients with the aim of reducing costs. While these tools can be adapted to external client needs, there is a risk that the bank or asset servicer's own needs will be prioritised over those of its clients.
Asset managers face a lot of competition when fundraising and must demonstrate that they bring real added value for their clients. This means they need to keep their own strategy, and outsourcing should not mean they have to adapt themselves to a specific workflow or connectivity constraint.
Our service offer is 100% client-oriented, with no predominant "own account" activity, and we have an open architecture – which means we are connected to the tools of various service providers that asset managers need. Our ambition is to provide clients with real solutions and not create constraints.
At a time when asset managers must reduce costs and focus on core value add services, a trusted provider with a robust but flexible solution can help them rise above the competition.
Click here for more information on SGSS’ front-to-back outsourcing services
Article published in Funds Europe in June 2021.