FIS on how to ‘future-proof’ the firm

This article is sponsored by FIS

Well before covid-19 moved the world to Zoom, GPs understood the need to invest in technology solutions. But the pandemic dramatically shortened the industry’s timeline for upgrades as a fully virtual work environment revealed current limitations.

As managers aim to improve their technology across the firm, FIS senior vice-president of asset management and private markets Shannon Dolan argues that GPs should make sure they aren’t merely building systems for this crisis, but for the future of the organization as well.

Which technologies should GPs prioritize as they update?

I think the first lens to look at is really in the context of ‘future-proofing.’ This means choosing long term, sustainable solutions that provide scale and efficiency. And two of the key priorities of CFOs at the moment are migration of data to cloud solutions for fund accounting, deal sourcing, LP reporting and the like, and choosing SaaS options.

Historically you had upgrades, and even with core systems, there’s still a concept of upgrades. But now the SaaS model gives customers version-less solutions and constant upgrades, so the clients are always using the latest and greatest. Clients operate in a multi-tenant, shared environment, using the same version that is consistently and seamlessly upgraded. In the space of private markets, and particularly partnership accounting, portfolio administration, and investor servicing, we see that as a trend bound to continue which is why FIS is moving there with our SaaS platform.

How should managers approach LP servicing technology, given its importance?

Priority number one should be ensuring an element of self-service through an investor portal. There will always be the traditional document sharing, but portals should also provide access to data, along with online analytic tools that give LPs everything they need to understand their investments, in their own way.

Beyond that, GPs have the responsibility of ongoing investor servicing, which means using that portal to communicate with LPs, track those interactions, capture the questions, and more importantly now, facilitate e-signatures and consent to various documents. Right now, hopping on a plane to have a meeting is not an option, and mail services can be terribly inefficient and require investor contacts to provide their home addresses. So, having convenient and secure e-signature processes that are integrated into their portal is ever more important.

Still, this is a good time to point out that a GP doesn’t always need to invest in a brand-new system. Sometimes they just need to tap a greater share of the functionality their current system offers. Like smartphones, most people tend to only use 10-15 percent of the available functionality and haven’t kept up to speed with what these solutions can do for them. What covid has proven is that necessity is the mother of adoption, as managers have finally begun to get the most out of their current systems.

If that’s the case, what factors should determine whether it’s time to invest in a brand-new system or solution?

When it comes to the investor servicing side of it, the platform should be one that’s widely adopted by investors, who like everyone else, have limited resources. A firm shouldn’t be asking LPs to log into an unknown system and create an additional burden for them there.

Secondarily, the platform should be flexible enough to let a GP’s brand come through. In this digital era, the more the personality, culture, and tone of a firm can be communicated through these portals, the better. The signatures and the ad hoc reporting and querying that might have taken place in person have now shifted online, which means the online experience needs to build the brand identity. That may also include expanding the offerings into video, with online streaming capabilities that further their brand.

You also want to deliver an interactive experience, because more and more of the dialogue between GPs and LPs will take place in these portals.

This is still part of the ‘future-proofing’ we advocate because it’s clear the industry won’t be taking functionality away in a post-covid era. LPs, have, by now, gotten used to reviewing those quarterly reports or even the annual investor meeting from the comfort of their home or office. You’re going to be operating in a hybrid model of both face-to-face and robust digital interactions. Think about these solutions in terms of providing a seamless experience that is perfectly in sync with a firm’s brand identity.

What about on the portfolio monitoring and analytics side?

On that side, it’s all about the data: the quality and integrity of the data, and the controls to ensure both. As the portfolio grows, managers add different types of portfolio companies and performance metrics, yet the GP still has to be able to evaluate the performance of all the investments, regardless of the vintage. Because once again, GPs will need to access the data in such a way that they can see it and share it with all relevant stakeholders. So if a GP allows for portfolio companies to submit their info in a non-standard way, then they have to be able to cleanse and standardize that data in a way that can be analyzed and reported and compared in aggregate.

GPs tend to invest in ‘best in breed’ solutions. How can managers integrate their various systems?

Integration is always going to be difficult. It’s not a priority until a situation shows why it’s needed. And nobody buys all their systems at once. Even if first time funds wanted to buy some all-in-one solution that tackles everything from deal sourcing to investor servicing to human resource management, no such platform exists. Everyone, for now, is going to wrestle with multiple systems.

So, with that in mind, managers need to understand the openness of an application. Basically, can it work with others? Currently people are relying on protocols like APIs, which is the mechanism du jour. But no matter what they use, that service provider or consultant should be looking at how to make these systems work together, while maintaining integrity of their data. This, of course, requires that vendors have a set of best practices and experience in understanding how data traverses a manager’s entire information ecosystem.

And that’s the crux of ‘future-proofing.’ It’s not selecting or building a system for a single moment or purpose but creating an entire environment that fosters accuracy and access to every key stakeholder during every phase of the investment process. It can’t be tethered to one problem or crisis. And it must allow the firm’s technology to grow in value just like any of its portfolio investments.