Fund administration has an ally in AI and automation, best leveraged with the whole picture in mind.
Fund administration operates within a broad range of factors and variables, from individual client needs to market conditions. Private capital especially requires an incredible level of customization, and now many in the industry are expecting AI and automation to improve quality, efficiency, and delivery – to do better, more, and faster.
But the nature of fund administration means you can’t just bring in AI to make blanket improvements. You don’t deploy AI to transform the organization into what you want overnight. Instead, you need to use AI to improve, incrementally, the organization you have today.
To understand the difference, shift from thinking AI will replace people or workflows to using an operating model perspective, where you find weak points in your organization and use AI tools to address them.
Mapping the operating model
To start, map out your entire operating model, end to end: the people, processes, workflows, individual tasks, resources, technology, and systems. Examine how and what data flows into and out of the organization. Take a look at alignment. How do all the elements line up with your goals, strategy, and mission?
Benchmarking – when possible – provides clarity into your inefficiencies as well as efficiencies and locates the bottlenecks. Knowing your strengths, incidentally, helps you avoid inadvertently overriding them.
There’s also nothing like comparing your business against competitors to make your weaknesses stand out. You may think you’re doing well in one area, but competitors are surpassing you. You may discover that you’re losing money somewhere, uncovering a previously unknown inefficiency.
Now you can target where AI would be most useful in this roadmap for improvement.
The value of manufacturing principles
I followed these principles in my career in manufacturing. Obviously, fund administration is different, but the principles still apply.
One only needs to account for how fund administration handles a lower volume of “products” but a greater mix of different client needs and customization. Our firm serves many clients, but each requires a vast array of skills, tasks, and deliverables. The variables are endless, and part of our people’s expertise is that they intrinsically understand what’s needed in each case.
AI and automation can improve this situation in a number of ways. Instead of building different tools for each client, which gets costly, or trying to broadly apply tech solutions that don’t handle the necessary nuance, AI helps us build flexible tools more efficiently, allowing for better and easier customization. Clients get what they want while the organization doesn’t have to overinvest in underutilized systems with countless purpose-built solutions and workarounds.
People first
Here’s where the intersection of people and technology is important. By making room for flexibility – allowing for constant change depending on the client – AI enables people to shift quickly between setups. Again, if you’ve mapped your organization thoroughly, you can harness AI and automation to smooth and improve the specific workflows for all of your client teams.
Further, firms can provide the training people need not only to facilitate better efficiency, but also better quality. Enable people to move across tasks quickly while also providing them tools and information so that, as in manufacturing, they can implement intra-process quality checks to correct errors close to the source and improve the process going forward.
Facilitating the best interface between people and machines is key: everything and everyone has to work together. It starts with that operating model perspective, then picking the proper AI tools to build and enhance people’s skills. It’s also a matter of finding the right partnerships, if necessary, to enable the best execution. Then organizations can continue to measure their progress so they can continue to improve.
Bob Chowaniec is Chief Operations Officer and Co-Founder at 4Pines Fund Services.
