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The Digital Revolution in Fund Management: Benefits, Challenges and Solutions


The Digital Revolution in Fund Management: Benefits, Challenges and Solutions

March 2022

Andrew Macintosh


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Last Updated on June 15, 2023

Digital transformation is now necessary for companies across different industries to survive and ensure business continuity. This includes the fund management industry.

Fund managers must embrace digital transformation in their practices — everything from staffing to know-your-customer (KYC) regulations to processes and operations.

What is digital transformation and its benefits?

Digital transformation incorporates digital technologies into one’s business processes and culture, simplifying complex processes and running the business smoothly and sustainably. Here are several applications and benefits of digital transformation for the fund management industry.

1. The case for automation

It’s not uncommon for fund managers to ask potential clients to fill out multiple forms or paperwork to set up an account. This does not lead to a good customer experience as it tends to be a tedious and lengthy process. Going digital will resolve this issue by speeding up the process and letting customers access the forms on demand. Additionally, with the existence of cookies, you don’t need to refill the same information multiple times for different needs.

Digital solutions allow clients and fund managers to comply with the know-your-customer (KYC) regulations without being in the same location, which also speeds up the process and increases efficiency. This is in stark contrast to a decade ago when clients must go to the fund management office. The same principle also applies to customer support; clients can now reach assistance anytime via live chats 24×7 or social media, while in the olden days, they needed to ring the office during office hours.

Automation also helps companies avoid penalties due to compliance breaches. Creating investment guidelines is necessary, but reading complex investment management agreements (IMAs) can pose a challenge. With a combination of robotic process automation (RPA), optical character recognition (OCR), natural language processing (NLP), and machine learning (ML), the process can be done instantly in an accurate and risk-free way.

Companies can reduce manual processing and cut costs through robotics process automation, such as cash and stock reconciliation processes. Doing so means that businesses can hire less staff and not have to worry about sick days or unexpected leave since robots can work all day. Finally, such technologies can also analyse a customers’ profile and risk tolerance to create a personalised investment plan for each customer.

At Lanturn, we have a top-notch administrative system and software in place to assist you automatically in the fund administration process, including audit purposes, bank reconciliation, processing and recording of fund expenses, and creating financial statements.

2. Embracing the online nature

The regulations and compliance needs of the fund management industry are not constant. These are continuously changed by regulatory agencies to keep up with evolving business practices. By incorporating digital solutions, especially for fund management, you'll not only be reminded of regulatory changes and compliance requirements regularly but also gain greater ease in managing them. Besides streamlining operations, these solutions can help you avoid fines resulting from non-compliance.

3. Save time and money 

You can reach your clients anytime and anywhere by going digital and online. You can solve issues or execute tasks faster as it’s not restricted by office hours or location. Additionally, going digital and welcoming the paperless environment will result in a 13% revenue increase and be perceived as more valuable than their industry peers.

Challenges of digital transformation

Transformation of any kind can be a challenge; digital transformation in the fund management industry is no exception. Here are three challenges your business might face during the digital transformation journey.

1. Budget Constraints

One reason that may hamper innovation and digital transformation is the lack of funds. The truth is, digital transformation is an ongoing process that doesn’t come cheap. Being well-prepared by allocating funds to your IT budget is essential.

Aside from having a clear vision or goal, if you are considering implementing a digital fund management solution, you must also consider how it will benefit your business in the long run. Can it be seamlessly integrated without disrupting existing workflows? Will employee training be necessary? By addressing these questions, you can determine the budget required to align with your specific needs and goals.

2. Cybersecurity threats

While it’s true that digital transformation brings beneficial technologies, such as IoT, mobile, and web applications, to ensure business operations run smoothly, all these components are surfaces that hackers target to execute cyberattacks.

One of the most common surface attacks is the web application (55%), as found by the 2020 Global Threat Intelligence Report. These surfaces are vulnerable to evolving cyberattacks, including distributed denial of service (DDoS), phishing, and malware, so the more reliant you’re on technology, the more vulnerable your business is to attacks.

Having a competent IT team can make a difference, but good help is hard to find in the IT space, which brings the last point below.

3. Lack of IT talent and expertise

IT talent is the backbone of seamless IT and digital usage in every company. Their expertise is what we count on when a problem arises or to drive innovation and research in the tech space. Unfortunately, the increasing demand faces a limited talent pool. That’s why hiring talent overseas remotely can be a solution, but it can be a complicated process that still requires resources.

The truth is that only a handful of people have adequate skills to meet the ever-growing demand. In 2017, Capgemini found that cybersecurity and cloud computing were the two skills in most demand, and those have the greatest talent gap. Approximately 40% of applicants are proficient in these skills, while the demand for them is approximately 60%.

Thankfully, fund managers can sidestep these drawbacks by partnering with Lanturn, a digital fund management solution that’s trusted by top fund managers in the industry. Automate your company’s day-to-day tasks to save time and effort, so you can focus on growing your fund.

Lanturn also lets you stay on top of complicated and ever-changing regulations, so you are sure that you don’t miss anything. You can also connect with your clients and partners seamlessly, making sure that they are always updated.

Lanturn also saves you money because you don’t have to maintain your own software, servers or IT staff. Lanturn will do it all for you.

Ready to go digital with Lanturn? Contact us now!

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