Standardising the fund administration industry

Fund administrators have, over the last decade, focused a lot of attention and marketing dollars to persuade clients to buy customised, premium value-add services, in a bid to stand out from the crowd. To some extent, this has been a period of seduction, driven in large part by the incredible sophistication and evolution of technology tools.

This has empowered fund administrators to ramp up their middle-office offerings and get closer to their clients. That is no bad thing, but according to Robin Bedford, CEO of Opus Fund Services (‘Opus’), all that most fund managers want is an accurate, timely, and cost-effective product, delivered to them the best way possible. Clambering for highly bespoke services is not something he sees externally, nor encourages internally.

“Rather than a boutique, custom ‘only we can do this’ mentality, we are focusing on a standardised, automated route that we think better meets client’s true demands,” says Bedford. “We are driving towards an ultimate goal, to remove people from needing to complete repetitive tasks such as data processing. Developing our own technology allows us to focus on smart automation and achieving the mythical goal of Straight Through Processing (STP). Additionally, having dedicated cybersecurity, risk, internal audit and IT teams allows us to carefully plan for the best, whilst preparing for the worst.”

Opus has always thought differently, as evidenced by its tagline: “Think Alternatively”. In Bedford’s view, fund administrators create a veneer of complexity, against which they present new tools and solutions. Rather than take this approach, which might only benefit 10 per cent of its clients, Opus strives for payback on 100 per cent.

“When developing technology, we’re focusing on building systems and processes that create unique benefits for our clients. Whether that’s data redundancy, report accuracy, faster NAV delivery, or development of proprietary smart technology that automates processing; we look to scale using technology and process allowing us to devote more hours to complex, more manual tasks,” explains Bedford.

Within Opus, constant innovation is driven from a culture that questions everything. “There is a relentless pursuit to continuously improve what we do, and how we do it,” stresses Bedford. This resulted last year in the release of a new product called JET, which leverages smart automation to process all accounting entries for the preparation of NAV.

The decision to allocate resources to developing the JET system “was a no-brainer”, says Bedford. “Aside from reducing time needed to process NAVs by over 90 per cent, it removes people from the process, resulting in significant cost savings and reduced risk of human error. Since the first version was released in 2017, tens of thousands of accounting entries have been automated and thoroughly tested. Each month we use system driven metrics to further enhance the system.”

All journals automatically appear in JET, by pulling data from the various Shared Service teams and third-party sources such as banks, prime brokers, etc. The current version of JET suggests what the journals should be, and these can either be accepted, at which point they automatically flow through to create the fund NAV, or they can be amended if needed. As JET evolves, then future versions will skip the acceptance stage and will move towards an automated NAV ready for final review.

“We get an end-of-day report showing the STP rate for all funds. If I look at yesterday’s data, for example, the straight-through processing rate was 69 per cent. We can also see reasons for the 31 per cent of amended or manual entries. By using this data, we continually tweak and modify the NAV creation process to get as close to 100 per cent STP rate as possible. Using this approach, we are effectively trying to mutualise the hedge fund industry, which is famed for its ability to automatically process vast amounts of data and generate daily NAVs,” says Bedford.

Whilst working on a number of exciting initiatives, Opus is looking to improve the data gathering process and become fully automated; a difficult task, however, given that Opus deals with hundreds of different banks, brokers and counterparties, some of which are more automated than others.

“Ultimately, we want to focus our man-hours on analysis and review. Do the numbers look right? Do they make sense? That’s where our experience and expertise add value. By standardising the fund administration industry, we ensure that Opus delivers an accurate, timely, cost effective product to our clients, and their investors,” concludes Bedford.

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