In-house or outsourced: how fund operators can build a scalable operating model
Neil Dolby, Head of Global Private Markets Operations, abrdn, explains the complicated procedures around trying to create a one-size-fits-all approach to in-house operating models.
Fund Operator Editor POSTED ON 8/16/2022 8:56:53 AM
In-house or outsourced?
The benefits of in-house and external innovation in a business’ tech platforms, vs outsourcing, are something every fund operator needs to investigate, says Neil Dolby, Head of Global Private Markets Operations, abrdn.
At a recent Clear Path Analysis event, Investing in Private Markets, Europe 2022, industry leaders from organisations including Phoenix Group, abrdn, and Railpen, gave their thoughts on how the private markets investment is changing and why fund operators need to keep up to date on decisions about technology.
“We have a talented team, and it is quite clear as to what the solutions could possibly be, however, the downside is that if you are not bringing in some fresh perspectives, the solution could not necessarily be one that is absolutely rounded."
Dolby was asked if in-house innovation was the only solution around operating models. “It is definitely part of the picture,” he said. “[It] brings several things. There is often a short cut to what the actual issue is. Identifying the problem that you are trying to solve is very clear if you’re in-house.”
He added that it was also likely to be a short circuit to the actual solution. “We have a talented team, and it is quite clear as to what the solutions could possibly be, however, the downside is that if you are not bringing in some fresh perspectives, the solution could not necessarily be one that is absolutely rounded,” he explained.
Many firms do hope The Institute of Chartered Accounts of England and Wales (ICAEW) lists “access to industry-leading technology and increased investment innovation from investment and fiduciary managers” as the main advantage of outsourcing.
“In-house isn’t a full solution because there are many areas of expertise that we don’t have or services that we want to buy in order to benefit from our providers’ expertise and technology solutions,”
Expertise in the operating model
One of the other key factors that having operations in-house brings is immediate expertise, he said. “We have fairly large teams already and they are accustomed to the different asset classes. In-house also potentially speeds up the process, insofar that we don’t have to engaging a new partner,” he said. “We can get straight to it.”
Though he was careful to say that for every company and every operating model there were differences in how it would work. “In-house isn’t a full solution because there are many areas of expertise that we don’t have or services that we want to buy in order to benefit from our providers’ expertise and technology solutions,” he said. For example, Dolby said his company does not want to build its own fund administration platform when it can buy a great one from someone else. “There is a balance between in-house and bringing in external perspectives,” he said.
This also adds to other ongoing questions in fund operation around if it is possible for an asset manager to be a technology company and to build its own tech.
Dolby thinks the idea will receive mixed responses as every company is different and some may flourish and other may not at the idea of this level of in-house. “Technology is definitely one of the keys to our future in asset management. It is critical for client interface and the investment process.”
To learn more and read the interview in full, please click here.
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