Automating the paper chase and unlocking value in fund administration

The digital revolution in financial services extends to the back-office, too, writes Bob Balfe is Chief Technology Officer at 4Pines Fund Services, who argues that when it comes to routine work like document intake, saving 10 minutes per form can add up quickly.

By Bob Balfe

Read the original article here.

When a new fund launches, it needs a compelling investment strategy and financial partners. But the fund isn’t established until your subscribers climb a mountain of paperwork required for taxes, KYC regulations, AML rules and other compliance issues. Only then can you establish a track record of success in order to secure more capital in the future.

These fundamental tasks aren’t usually associated with the kinds of advanced technologies that revolutionised investing strategy and market analysis in recent years. But these advanced technologies today are helping fund administrators to overhaul middle- and back-office operations, achieving task status transparency for all parties, saving time, and helping human capital refocus on higher-value work.

Automating subscription docs, for example, is part of a suite of targeted solutions that combine into far more efficient financial and professional services. After all, these subscription docs are, to be frank, a pain for whoever deals with them – not to mention an expense.

Using out-of-the-box document extraction tools and digital signing to replace so-called wet signatures, service providers can quickly and easily absorb info for sub docs and other paperwork. It saves time on both ends of the deal. Your subscribers and partners don’t want to be paying for paperwork anymore than you do. They certainly don’t want to be downloading, completing and returning PDF documents that require new inputs – and then repeats of the process if there are mistakes.

Tech automates the entire approval process, exchanging documents with lawyers, handling the back and forth of editing, and resending in a streamlined resubmission process that occurs when mistakes are found. GPs and LPs can even edit their forms in a friendly web interface that includes prompts and assistance. In addition to close communication and transparency, the tech stores all of the auditing data associated with every exchange.

Digital tools can guide users on both sides of the equation, through easy-to-understand web forms that instantly populate the required paperwork and machine learning that catches mistakes along the way. Ultimately, these solutions help investors – or others filling out documents – to complete forms more quickly with fewer mistakes. Streamlining a 120-page subdoc into a series of easy-to-follow input screens while also minimising questions based on an archive of answers to FAQs can make the process much easier for investors. Going digital also has other benefits, like not receiving hundreds of snail-mailed subdocs or emails dispersed across your inboxes: imagine the process being 100-percent online and self-servicing so one receives the digital documents, the extracted data, and an officially sealed and signed DocuSign document approved across multiple parties.

People will still need to check inputs and process exceptions to whatever rules guide the technology. But today’s machine learning software solutions rapidly learn these exceptions, reducing the need for human intervention over time and accelerating processing.

Document extraction tools are but one digital solution in the toolbox of tech-savvy fund administrators. In fact, for those of us watching closely, the market is flush with providers peddling tech that they claim is driving the future of fund services, making it hard to figure out what tools to choose.

Fund managers need to ask themselves what technology will actually advance their business objectives and draft a plan to hit those goals.

While the answer will vary among firms, automation of routine work, like document intake, should be at the top of the list. It’s the type of technology win that can build momentum for broader digital innovation across organisations.

Still, despite the central role of data in front-end operations, financial services have lagged compared to consumer-facing companies in banking and insurance. At the same time, however, clients and partners are also raising their expectations on transparency, agility and reporting speed. The bottom line is that the fund-services paradigm is shifting around advanced technology, as that technology moves from being a research project within organisations to a competitive imperative in their spaces.

Gartner, for example, estimated that AI augmentation created $2.9 trillion of business value globally last year. That’s evidence that those betting on advanced innovations to unlock value are already being rewarded. Among the frontrunners in AI adoption, 60 percent are already seeing success via increased revenue, according to Deloitte.

Big changes are on the horizon. But some fund administrators are still looking for a place to start. Saving 10 minutes on a tax form may not represent a digital revolution. But imagine saving 10 minutes on each of the 400 tax forms that an administrator might be processing in any week. That’s 4,000 minutes — or eight workdays. The time adds up. So does the value.

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