There are many reasons for an asset management company to undertake an operational assessment. The most common are that firms grow assets under management, change or add the types of assets traded, expand the range of strategies and/or funds it manages and have a more complex investor base with different requirements for shareholders. All these changes mean systems and processes set up at the beginning of the firm’s life cycle may no longer be fit for purpose.

FinServ Consulting leverages all its experience and expertise gained in working with similar funds or businesses to help support its clients in this exercise. This has given the company unique insights into how assessments can be conducted and what asset management firms will gain from the process.

Identifying Problem Areas

The first step in the process is to look at and analyze an investment firm’s full operations and processes to identify inefficiencies that are holding back the growth of the firm. This process can also reassure investors that the firm is doing everything it can to use its resources effectively while at the same time having processes and controls in place to ensure that operations from front to back office are running smoothly and are fit for the present as well as the future.

The assessments can highlight a variety of areas where firms may want to make changes. This strategic initiative looks at how technology is being used, whether service providers deliver in the most effective way and if teams are structured for optimal efficiency.  The review can expose bottlenecks, suggest areas where best practice can be implemented and show how to streamline a business. Ultimately, a target operating model is defined and presented with a path to get there.

Although operational assessments are routinely conducted by many firms, lately there has been an increase in requests for these evaluations. This is due to several reasons. For example, because of the pandemic, some technology investment has been delayed however, firms have only grown in complexity. Inefficiencies caused by manual processes may be exacerbated as the fund grows its assets under management (AUM).

Many firms still use Excel or have many operations done manually when there are more eloquent automated solutions available. The frequency of this can be a direct result of the infrastructure set up at the beginning of a firm’s life cycle. As it grows, those processes may no longer be adequate, particularly if it has experienced changes in the types of asset classes traded, the size and volume of trades or other factors. These factors mean existing infrastructure is less optimal. The systems used at the start of a business may not be scalable or the most efficient as it grows.

Identifying Where Efficiencies Can Be Made

Once the parameters of the operational assessment are established, everyone involved in a specific process in a fund are interviewed using a set list of questions. This helps identify ways to streamline work – such as trading workflows.

For instance, portfolio managers do not always have all the information they need at their fingertips. There may be a lot of manual work before a trading decision is made. Interviews with portfolio managers, traders, operations, finance, and anyone from the technology side involved in these processes are interviewed to identify areas where there may be ways to update work streams or plan for future expansion.

A list of predetermined questions also gives the conversations a focus and helps identify areas of inefficiency that can be improved.

The resulting list of projects – ways a firm can change processes, technology and even people to be more efficient – can be daunting. These projects can be small or large, complex or simple, easy to implement or difficult.

While it is always up to the firm to decide which projects it wants to tackle in the short or long term, some like to focus on quick wins that may be relatively inexpensive while others put together a program aimed at gradual transformation of processes and procedures.

FinServ Consulting has developed a project impact/effort matrix that helps identify which actions will have the most impact on the business while also judging the difficulty or complexity in implementing these compared with those that are much easier to do but have less overall effect on the business.

This assessment is a snapshot, giving the firm an overview of inefficiencies and what the impact of fixing them will be. Quick wins could include things like reorganization of the folder directory, discontinuing daily reports or giving Bloomberg access to more people. Key improvements that may take longer to implement might include hiring more people, like a tax director, implementing new systems like a portfolio management system (PMS) or a data warehouse.

The addition of new strategies and funds may also put a strain on existing infrastructure. Likewise, the introduction of managed accounts, funds of one or onshore/offshore structures to accommodate a wider range of investors will necessitate different procedures and processes.

Operational due diligence by investors can also identify red flag areas where improvements need to be made.

A Path Forward: Recommendations

At the end of the operational assessment there are usually five to six strategic areas where change is recommended. These range from relatively inexpensive projects to more long-term changes.

The assessment gives a timeline and costs to help firms make decisions on what to tackle first and what it may want to consider in the longer term. It is the firm’s decision what to do next and how.

By using FinServ for this exercise, unlike other consultants, the job does not end at giving the firm recommendations. FinServ is available to help implement all the suggestions, provide assistance in choosing the right technologies, service providers, processes and procedures to ready the firm for present operations as well as for the future.

While the operational assessment does not look at whether and how a firm might go into another business, like loan servicing, the process does look at operations where targeted improvements will make jobs more efficient and scalable. Some growing firms worry that every time they add a new fund or strategy, they will need to hire more persons, adding to the costs and making it difficult to scale the business. For them, outsourcing options and third parties that can assist them and make more staff unnecessary may be better options than adding to the employee list.

Assessments are also made on third party providers, like fund administrators. By looking closely at what a fund administrator provides, they could request more services and gauge whether the amount of money the administrator is charging is close to the costs for similar businesses. The assessments are holistic, looking at all the processes of the entire firm.

Whether the need for an operational assessment is necessitated by operational due diligence by investors, a more complex investor base, firm growth or just a health check after a few years of operations, the process is geared to help tighten processes and procedures, streamline controls, and get the firm to the desired future state where it is capable of being more efficient and making more informed decisions. A fund’s infrastructure should never dictate what trading strategies are permissible or impede a business decision.

Even firms that believe they are relatively straight forward as they only do a small number of investments or trades may be challenged by the complexity of regulatory filings, the different types of data needed for a variety of purposes and a complex investor base.

Conclusion

FinServ Consulting, with years of experience working with a wide variety of asset managers, brings its knowledge and expertise to the operational assessment process – and does not leave the client with a list of “to-dos”. It helps in the implementation of the suggestions to create a firm fit for purpose now and in the future.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799. 

The evolution of technology and its impact across various industries has become widely accepted, particularly for Financial Services. However, Private Equity’s acceptance of new technology has lagged behind other subsectors. Resistance is subsiding as Private Equity Funds are rushing to adopt Client Relationship Management (“CRM”) tools, utilize unstructured data, and transition to the cloud.

Relationship Management

Success within Private Equity is reliant upon strong and enduring relationships that are difficult to manage without the proper infrastructure. Scattered data paired with a lack of centralized oversight can serve as a catalyst for inefficiencies that hinder deal execution and frequency. Efforts to combat the before mentioned issues have given rise to the popularity of CRM systems. Furthermore, numerous CRM solutions can be configured to streamline reporting and eliminate user error.

Although the absence of a CRM system can be detrimental to a firm’s success, a poorly configured system that fails to meet user requirements may be worse. Inadequate systems are generally accompanied by a lacking implementation partner that failed to assess the organization’s needs prior to vendor selection. It is crucial to enlist the services of an experienced implementation partner that has “been there, done that”.

FinServ has successfully implemented CRM solutions for countless Alternative Asset Managers and Financial Institutions. Not only are we a Salesforce Partner, but we also have significant experience with other industry CRMs such as Backstop, Clienteer, and Dynamo. FinServ can walk you through the entirety of the process by gathering business requirements, managing the implementation so you can focus on your business, and tailoring the solution to facilitate your unique procedures.

Data Utilization and Analytics

We are in the golden age of data and organizations are eager to leverage as much of it as possible. Unfortunately, sourcing data from a variety of locations often leads to a lack of uniformity and an assortment of issues. Private Equity firms are implementing robust analytics and data science for Transactional Due Diligence, Post-Investment Value Creation, and more. The application of data science within Transactional Due Diligence is exceptionally groundbreaking as perspective buyers are often subjected to tight timeframes of approximately 6 weeks.

Business Intelligence, Data Science, and Machine Learning allow Private Equity firms to conduct real-time analysis and assess billions of data records in a limited amount of time. Granular post-investment analysis can be attributed to geography, customer type, and more. The segmentation of the data enables a comprehensive understanding of the business. Thus, augmenting the Private Equity firm’s ability to perform the focused improvements that are central to their business model.

Exhaustive analysis of the fund’s overarching portfolio and individual companies hinges upon access to structured data. FinServ has the extensive Business Analysis and Operational Assessment experience that is required for structuring processes and data accordingly. We will partner with your organization to remediate operational issues while integrating innovative technology.

Transitioning to the Cloud

Cloud utilization is rapidly increasing as stigmas against housing data in off-premise locations have eroded. Private Equity firms are realizing the significant benefits provided by transitioning their data to cloud environments, SaaS, and IaaS locations. Migration allows firms to focus on their core competencies rather than hosting data. Cybersecurity is a predominant concern that will be alleviated by outsourcing a portion of the responsibility to an organization that exclusively focuses on housing internal and client data. Safeguarding this sensitive information is required for client safety, firm reputation, and regulations such as GDPR.

One consideration that may be inhibiting your organization’s migration to the cloud is the massive undertaking of doing so. FinServ has honed our data migration expertise through 15+ years of working alongside more than 40 of the world’s top 100 Hedge and Private Equity Funds. Communication is emphasized throughout our engagements and we will partner with your organization to ensure a proper and efficient transition. Furthermore, FinServ will take the opportunity to streamline processes and eliminate bottlenecks that have been hindering your business.

Even though Private Equity has been slower to adopt new technologies than other Alternative Asset Managers, the industry has begun to align with key initiatives offering indisputable benefits. The implementation of superior technologies like CRM systems, Cloud infrastructure, and the utilization of data for advanced analytics supplements competitive advantages and investor returns.

COVID-19 abruptly forced many financial institutions into a remote staffing model without the slightest inclination of its duration. Barring the infrastructural challenges, many employees have enjoyed the elimination of commuting, comfortable attire, and flexibility. The mandatory adoption of working from home will have significant implications for the daily trips to the office that were once the norm.

An Operational Assessment of your firm’s technology and procedures will identify issues that will be exacerbated by a sustained virtual workplace and provide insight into four verticals: Planning, Security & Controls, Collaboration, and Client Interaction. It is important to perform an exhaustive analysis of your firm’s technology and procedures to identify issues that will be magnified by a remote model.

Planning

The importance of planning is one of the few constants in today’s erratic climate. Many organizations are creating management teams and enlisting the assistance of third-party specialists to navigate these tumultuous times. Creating a specialized team will enable flexibility, establish accountability, guide the implementation of new technologies, and mitigate risks.

Security

The sensitivity of client data within financial services results in security being a predominant concern. One particular issue is numerous employees accessing company information with wireless networks beyond the organization’s control. The combination of unsecured networks and increased attacks from opportunistic deviants poses significant risk to financial institutions and their clients.

Furthermore, cybersecurity teams’ impeded ability to respond may affect their capacity to remediate issues in a timely fashion. Many teams are accustomed to face-to-face collaboration and/or additional resources that may not be available when working from home. Prevention is the best defense and can be achieved by conducting a detailed assessment of your firms processes and systems.

Establishing procedural controls and maximizing the native features of current technology will enable your company to stop attacks before it is too late. An effective defense for eliminating external access to company information can be as simple as utilizing 2 Factor Authentication or modifying a monthly process.

Collaboration

Collaboration is a major concern that inhibited employer’s from implementing a remote workforce prior to the pandemic. The recent success of remote work has assuaged worries and has even led banking heavyweights such as JPM and Barclays to consider the implementation of remote teams and/or rotational models. Rotational models are particularly attractive because they reduce fixed costs while balancing the benefits of in-person and entirely remote staffing models.

The short-term success of a virtual workplace will not persist if institutions fail to align their technology and operations accordingly. Video conferencing has emerged as the predominant medium for establishing virtual connections but has unfortunately been accompanied by a series of growing pains.

The sheer volume of concurrent employees leveraging the video conferencing system often overloads the solution if it was configured for a lower number of users. Additionally, various teams utilizing different platforms may result in access issues. Mass collaboration can be facilitated through the implementation of a uniform video conferencing system such as Microsoft Teams or a sophisticated document management system like SharePoint.

User error caused by a lack of sufficient training and limited employee access contributes to bottlenecks that can be easily avoided by partnering with an experienced implementation partner. Although the days of side-by-side spreadsheet collaboration may be behind us, teamwork can be augmented with the use of platforms such as Microsoft’s SharePoint. Multiple users can simultaneously work on the same file while SharePoint maintains versioning, audit trails, and an assortment of security features that protect sensitive data.

Client Interaction

Successful client interactions are dependent on thorough and frequent communication. The investment industry has recently experienced a level of volatility and uncertainty that makes communication more important than ever. Asset managers and financial institutions must have the necessary operations and technology to efficiently communicate and protect information that has traditionally been delivered in person.

A popular solution for the mass distribution of content among Salesforce users is Pardot. Pardot is a marketing automation tool offered by Salesforce that boosts communications with potential and current investors. Moreover, it is important to evaluate CRM solutions such as Backstop, Clienteer, Dynamo, or Salesforce to ensure that your team is maximizing their functionality.

The unexpected transition to remote work was a daunting task that will have lasting impacts throughout the financial services industry. Organizations must align their processes and technology if they desire a seamless changeover. Technologies such as Microsoft Teams & SharePoint, an Operational Assessment, and a dedicated Management Team are likely required. FinServ has served as a trusted advisor to the world’s leading Asset Managers & Financial Institutions for more than 15 years and is the ideal partner for facilitating this conversion. 

Salesforce recently introduced a cybersecurity focused offering that builds on the already formidable security capabilities of the world’s leading customer relationship management platform. With Salesforce Shield, organizations can institute better internal cybersecurity practices by developing clearer oversight of employee’s daily activities and stronger protection of their valuable data. Salesforce Shield expands on the class leading security infrastructure of Salesforce across the three key service areas of:

• Platform Encryption
• Event Monitoring
• Field Auditing

Salesforce Shields’s focus on these three services allows for a more nuanced utilization of privacy functionalities and clearer oversight into the firm’s cyber activities. Of course, administrators of standard Salesforce environments could always customize their firm wide security settings through a variety of restrictions, permissions, and requirements across the platform. However, with Salesforce Shield, administrators have exponentially deeper control and granularity when establishing and maintaining their firm’s online security. This article will provide an overview of each Salesforce Shield’s services, as well as the key factors management should consider when implementing the technology.

Platform Encryption

A standard Salesforce subscription only allows for the encryption of custom fields that are less than 175 characters, which is likely insufficient for many firms that maintain large amounts of customer data. For the first time, Salesforce Shield brings encryption to a wider range of custom and standard fields, including sensitive information such as Account Names, Addresses, Phone Numbers, and Emails. Platform Encryption with Shield allows users to natively encrypt their most sensitive data such as personally identifiable information (PII), confidential, or proprietary data, while meeting internal and external compliance regulations. Salesforce Shield also allows users to adopt the latest encryption innovations, such as Bring Your Own Keys (BYOK), which allow users to provide their own tenant secret, generate their own Hardware Security Module (HSM), and ultimately increase their control over the encryption processes.

Implementation Considerations:

1) Identify Encryption Needs

• • Firms need to first identify their unique encryption needs. Encrypting every piece of data that a firm has online would slowdown workflows, leading to inefficiencies that provide little returned value. Firms should identify and evaluate the potential channels and methods of attack they face, while also classify the data types that they would like to protect. At the same time, firms can specify which fields are the truly “must encrypt” elements and evaluate the business functionality changes that may come with encrypting this information.

2) Apply Field Level Encryption

• • Because encryption can be assigned at the field level across different users, firms need to decide which fields would be accessible by different users. Shield allows firms to grant permissions to certain fields only for authorized users, while also applying encryption to these fields for an added level of security. Once these capabilities have been properly vetted, users can begin testing how their business processes would work with this newly encrypted data.

3) Define Key Management Strategy

• • Shield enables firms to take on greater ownership over their encryption key management strategy. For an effective implementation of Salesforce Shield, firms should identify who can manage the encryption keys and define the protocols for backing up, rotating, and archiving keys.

4) Maintain Organization’s Encryption Policy

• • Platform encryption requires strong policy and procedure documentation to guarantee its effectiveness. Establishing the lifecycle of keys and periodic data backups ensures that the data your firm has today is securely maintained in the future as well. Meanwhile, periodic reviews of encryption protocols ensure that these established policies remain effective as data grows and new fields are added. Regular reviews of data encryption protocols are a critical aspect of continued data security and data effectiveness with Salesforce Shield. 

Event Monitoring

Salesforce Shield allows firms to have even clearer oversight of critical business performance and user behavior data. Firms using Salesforce Shield have a deeper understanding of the underlying performance, security, and individual usage of data stored in their Salesforce ecosystem. With Event Monitoring, managers can drill deeper into their event log files in order to visualize time relevant performance and security metrics. This allows managers to understand employee behavior within Salesforce, ensuring that they are securely utilizing the platform to its fullest potential, and overseeing the storage of their sensitive data. Managers would find these capabilities especially valuable during audits, when regulators can easily drill down to see what changes were made within Salesforce, by which users, at what time. Shield allows for this Event Monitoring capability on over 40 different event types across different user activities, all of which can be displayed across 16 pre-built dashboards.

Implementation Considerations:

1) Capture Read-Only Event Log Files

• • With more than 40 event types able to be captured using Salesforce Shield, firms should first review the current list to see which would bring value to their organization. Event logs can store the granular details of how specific users are utilizing the firm’s data, as well as the corresponding timing and location of these action. Therefore, understanding what data to be capturing as well as the means of capturing this data is critical part of a successful Salesforce Shield implementation.

2) Visualize the Data to Identify Critical Insights

• • The ability to directly transfer Salesforce insights into any business intelligence or data visualization tool, such as PowerBI (click here for an earlier FinServ post on Power BI), allows managers to quickly visualize trends and develop actionable strategies. Users can also build Data Loss Prevention or Adoption & Performance dashboards with Einstein Analytics or bring this data into any of the 16 prebuilt dashboards with the Einstein Event Monitoring Analytics tool included with Shield. Additional visualizations capabilities can also be found in pre-built apps via Salesforce’s AppExchange and data can still be exported to CSV files for additional analysis and visualization methods.

3) Take Action

• • Identifying gaps in security policies and procedures, modifying governance policies, and setting up access controls as well as transaction security measure are all early management considerations for an effective implementation of the Event Monitoring service. This will support firms in driving initiatives to increase user adoption, automating workflows, and improving the overall performance of their Salesforce environment.

Field Audit Trail

As companies continue to generate and track massive quantities of data, having an effective IT governance strategy in place becomes more and more critical. Salesforce Shield Audit Trail allows users to track the history of various data fields in their Salesforce ecosystem in a far more robust manner. While the field history feature included with a standard Salesforce subscription allows users to track 20 fields for 18 months, Salesforce Shield Audit Trail allows users to track 60 fields per object for 10 years. This is a significant asset for firms operating in highly regulated industries such as financial services. Shield allows firms to extend the utilization of their audit trails while remaining compliant with data retention and audit granularity requirements.

Implementation Considerations:

1) Consult Business Units to Understand Retention and Audit Period / Depth

• • Firms should first identify their data retention and audit period on a per object basis to understand exactly where and how Audit Trails may benefit their business processes. While the maximum possibility is for 10 years and 60 objects, firms should find the ideal balance between complete oversight and operational efficiency. Additionally, firms should consider the unique regulatory guidelines they must adhere to while customizing the service to fit their needs.

2) Set Retention Policies

• • Firms should determine which fields and objects should be retained for audit purposes. Additionally, identifying when and how long this information should be archived is a crucial step in a successful implementation of Field Audit Trail.

3) Identify Practices for Retrieving and Auditing Data

• • Finally, firms should develop best practices for obtaining, maintaining, and auditing this data. Steps such as setting up audit dashboards, defining standardized queries, and providing access to auditors in the permissions settings should be taken to ensure consistent and accurate reporting of Field Audit Trails in the future as well.

Security Benefits Over Standard Salesforce

The Platform Encryption, Event Monitoring and Field Audit benefits that Salesforce Shield brings to users, beyond the basic platform capabilities, offer an effective means of protection against a wide range of cybersecurity threats. Firms can now encrypt large amounts of information in standard objects, track and visuzalize a variety of events in pre-built dashboards, and maintain an audit history of dozens of objects for a decade. Salesforce has recognized that as the cybersecurity landscape continues to evolve, robust and innovative solutions are needed to keep their customers ahead of criminal attacks.

FinServ’s Capabilities

When securing your firm’s sensitive data from increasingly sophisticated attacks, it is crucial to partner with industry experts that understand the most effective solutions available. While Salesforce Shield brings a deeper level of sophistication over classic Salesforce security capabilities, sophisticated technology is only part of the complex cybersecurity equation. FinServ can gather the development requirements and implement the detailed policies and procedures to protect your firm for years to come. An effectively led implementation of Salesforce Shield is the best way to ensure that there is lasting security for your organization as cybercrimes grow more sophisticated and prevalent.

Integrating external data feeds from your Administrator can facilitate operations and eliminate many of the daily bottlenecks faced by employees. Investor Relations teams may struggle to adequately communicate key performance and investment data to investors if they are simultaneously juggling numerous information sources. Directly feeding Administrator data into Salesforce will allow them to navigate a singular system while answering critical questions. Moreover, you can finally eliminate your countless excel files and the associated processes that mandate excessive manipulation.

Salesforce boasts impressive reporting and data visualization functionality that will enable your firm to draw deeper insights. The amalgamation of Salesforce Reports, Dashboards, and real time data will allow your organization to create visualizations highlighting key investor and performance metrics. Thus, augmenting personnel’s ability to anticipate client needs and answer their questions. FinServ has developed an assortment of pre-built reports and dashboards that isolate data pertaining to investment strategy, region, fee structure, performance, and more.

How to Integrate Your Data

Salesforce offers three primary tools for uploading data into Salesforce: Data Import Wizard, Data Loader, and dataloader.io. Each tool is applicable in its own right with differing use cases and functionality. The Data Import Wizard does not require installation and can easily be found by performing a quick search within Setup. Once you open the Data Import Wizard, it is as simple as selecting your CSV file and mapping the fields via the Salesforce Interface. Although the Data Import Wizard is a useful tool for basic uploads, it’s record count is limited to 50,000 and it cannot export data. The Data Import Wizard can be leveraged for both Custom Objects and Standard Objects such as Accounts, Contacts, Campaign Members, Leads, and Solutions.

Data Loader is a more robust data integration solution than Data Import Wizard. It is an external client application and therefore requires installation. The Data Loader facilitates the importation of 5,000 to 5 million records and is inclusive of both data exportation and deletion functionality. Users can specify configurations with the user interface or command-line interface. More advanced users can use the command-line interface to automate their data processing needs. However, the command-line interface is limited to Windows users and uses the Salesforce Object Query Language.

The final and most developed option is the cloud based MuleSoft solution known as dataloader.io. Similar to Data Loader, dataloader.io boasts importing, exporting, deleting, and scheduling capabilities. However, it can pull data from a variety of sources such as Box, Dropbox, FTP and SFTP repositories. Data Loader’s functionality is dependent on the package offering (Pricing Information) and has 3 editions that are priced at $0, $99, or $299 per month per user. The number of records, file size, and related objects ranges from 10,000, 10MB, and 1,000 to Unlimited, 100MB, and 100,000 per month.

How FinServ Can Help

FinServ’s completion of hundreds of projects spanning the Back, Middle and Front Offices for more than 40 of the top 100 Alternative Asset Mangers has enabled an expertise in industry processes, technological solutions, database management, and more. Additionally, FinServ has a deep understanding of the granular details associated with constructing a customized data model that fulfills your funds operational needs. FinServ is an accomplished integration partner due to countless experiences with Administrators and other Third-Party Data Sources.

Identifying the correct data may appear intuitive, but it is a common pain point throughout the industry. FinServ will host sessions with your various teams to identify and document their requirements. Thus, enabling the structured categorization of necessary and superfluous data. Directly integrating data into Salesforce allows for the elimination of unnecessary calculations that often mandate reconciliation. Subsequently reducing strain on your infrastructure and employees to allow for concentration on value rather than performing endless maintenance.

FinServ’s role extends well beyond the traditional tasks associated with integrating your data feeds. Business processes optimization and the identification of enhancements will originate from more than 15 years of experience within the Alternative Asset Management industry. FinServ will consolidate systems, document procedures, ensure successful implementations, and redesign processes to construct a simple and efficient approach that supports both your business and personnel.

In order to understand the capabilities of Power BI, it is best to start with the fundamentals of Analytics & Business Intelligence (“ABI”) and data visualization. The combination of ABI and data visualization allows Power BI to articulate information in a digestible manner that is supportive of intelligent decision making.

ABI tools are user-friendly data management platforms that emphasize self-service and provide analytical functionality ranging from data preparation to insight generation. Business Intelligence (“BI”) leverages historical information while analytics employs modeling and statistics to anticipate future events. Generally speaking, BI is focused on what happened, and analytics is focused on why it happened.

Data visualization is the presentation of information through graphical mediums like charts, diagrams, dashboards, and more. Dashboards are an amalgamation of components designed to inform stakeholders in an aesthetically pleasing manner like the sales dashboard below. The goal is to provide an informative platform that is far easier to comprehend than traditional resources such as a spreadsheet with thousands of rows.

Power BI and Its Key Features

Power BI is a business intelligence solution that enables companies to draw organizational insights by using data visualizations, performing analytics, connecting to hundreds of data sources, and embedding content into external applications & websites. An additional benefit enjoyed by users on the Windows platform is its seamless integration with the Microsoft suite. In summation, Power BI allows users to connect, prepare, model, and visualize data.

Power BI incorporates numerous features (illustrated above) that assist in the analysis and comprehension of a business. Three particularly impressive features included in Power BI’s repertoire are Natural Language Generation (“NLG”), Automated Insights, and Advanced Analytics. NLG uses artificial intelligence to automatically produce rich text descriptions detailing outputs. Automated Insights are conceived from advanced algorithms and are a great way to initiate analysis on large data sets. While the initial analysis generated from Power BI can provide direction for additional research and evaluation, other factors may be sufficiently analyzed within Power BI without the need for further investigation. Advanced Analytics can be performed with Power BI’s internal ABI platform and/or by integrating with external models. Azure Machine Learning Studio’s drag and drop interface can be combined with SQL and R to conduct predictive analytics on data sets.

Subscription Options and Functionality

The three versions of Power BI are Desktop, Pro, and Premium. Desktop, the lowest-tiered option, can be downloaded from the Microsoft Store for free. It includes the core data visualization and analysis features; data preparation, reports, dashboards, connection to over 50 data sources, and the ability to export in various formats.

Pro includes all of Desktop’s functionality and can be purchased as a standalone product for an annual subscription of $10 per user license per month or as part of the Microsoft Office 365 Enterprise E5 suite. The enhancements differentiating Pro primarily fall under collaboration and the distribution of content. For example, users can share their insights by embedding visuals within applications such as SharePoint and MS Teams. Furthermore, users can leverage peer-to-peer sharing to distribute their work to external stakeholders with Power BI Pro licenses.

Premium, the most advanced offering, comes at a hefty annual subscription that breaks down to a monthly price of $4,995 per dedicated cloud compute and storage resource. Some distinguishing characteristics that amplify data analysis include enterprise level BI, cloud & on-premise reporting, dedicated cloud computing, and big data analytics. Other features that are included in Power BI Premium are increased storage, higher refresh rates, and a larger data capacity. Premium grants enterprise-wide access and is best suited for large organizations with significant business intelligence requirements.

Implementing Power BI in Financial Services

Power BI has countless applications for alternative asset managers and other financial services companies that span the front, middle, and back office. One of Power BI’s most popular functions is financial management and reporting. QuickBooks Online customers can utilize a preconfigured Content Pack that allows them to quickly construct financial statement dashboards. Users are immediately provided with functionality that comprises customer rankings, profitability trends, and various financial ratios.

Implementing and tracking KPI’s with Power BI allows investment managers to accurately evaluate operations. Best practice is to have KPIs spanning the front, middle, and back office because an unidentified issue in any of the three areas can be detrimental. A few prevalent KPIs are Investment Management Fee Revenue as a Percentage of AUM, Trade Settlements per Back Office Employee, Subscriptions vs. Redemptions, and Trade Error Rate by Asset Class.

Business intelligence can be applied to portfolio management by connecting Power BI to the underlying data sources detailing investments. For instance, asset allocation reports and dashboards allow fund managers to interpret the distribution of funds relatively easily. Another prominent application of Power BI is treasury & liquidity management because data visualizations can be developed to provide detailed breakdowns of cash management, FX hedge balances, and more.

Conclusion

Power BI is a powerful ABI platform that augments a business’s ability to consume data through the creation of interactive reports and dashboards. Business intelligence can be constructed to support any business function with enough data. More importantly, it can be configured to the firm’s unique needs and has the ability to adapt with dynamic business requirements.

FinServ has acquired deep industry and technological expertise through the completion of over 600 engagements at more than 40 of the top 100 Hedge and Private Equity Funds. FinServ can configure Power BI to accurately monitor operations, identify the correct KPIs, properly document business processes, and seamlessly integrate new technologies with existing infrastructure.

As previously discussed in SOFR is the New LIBOR, one of the key issues regarding the transition of $35 trillion in USD LIBOR assets to an alternative reference rate is the lack of sufficient fallback language. Inadequate fallback language gives rise to an assortment of complications when attempting to analyze contracts using traditional technologies. Fallback language is the contractual provisions that outline the procedure for transitioning to a new reference rate.

Fallback Language Elements:

Issues with Fallback Language

Numerous issues arise when analyzing the fallback language of assets tied to USD LIBOR. Contracts often fail to designate a benchmark replacement rate and therefore leave managers without a clear resolution plan in the occurrence of a fallback trigger event. Most of the language was designed to alleviate temporary gaps in benchmark rate reporting rather than the permanent termination of LIBOR. Consequently, the appropriate benchmark replacement is unclear.

Compounding the lack of clarity is the absence of a standardized contract structure across various derivatives and cash products. Moreover, many contracts lack the existence of fallback language altogether. The involvement of multiple parties further complicates fallback language negotiations due to a misalignment of priorities. The amalgamation of these issues has hindered firms from storing asset contracts in a sophisticated document repository with search capabilities and often warrants the manual review of individual contracts.

Addressing the Situation

Changes to the structure of a fund’s holdings and operations command careful planning and execution. Amendments deriving from the termination of LIBOR mandate the construction of meticulous roadmaps and the design of new business procedures. Their creation is impossible without the knowledge of USD LIBOR assets and processes. It is vital to take a detailed inventory of all holdings, systems, and operations that are subject to change. Consolidating contracts into one or more defined document repositories augments the renegotiation process by facilitating the application of targeted remediation strategies.

Following the familiarization of contracts and their storage, the application of document intelligence solutions can greatly enhance the navigation of fallback language with tools such as natural language processing (“NLP”) and optical character recognition (“OCR”). Document intelligence has shown the ability to decrease cost by 80% and processing time by 90%; while increasing accuracy and consistency by 25% and 50%, respectively. The classification and normalization of data augments your contract review team’s ability to analyze contracts. Additionally, NLP and machine learning (“ML”) technology enable access to vital information that was formerly lost in traditional document repositories.

How Document Intelligence Works:

More on Document Intelligence Systems

Document intelligence solutions automate the ingestion of contracts, extract and structure key data, and automate contract repapering. Repositories frequently lack the advanced search capabilities required for evaluating fallback language. The implementation of a document intelligence system that automates the ingestion of structured and unstructured contracts can fill this gap and streamline your firm’s technological infrastructure.

Document Intelligence solutions transform key contract data into structured data models that allow for advanced search capabilities. Next, the solution automates various components of the contract repapering process such as generating the proposed amendments. Contract repapering functions can be paired with workflow tools to further streamline the process. The assortment of features offered by a document intelligence solution result in significant time and costs savings while boosting accuracy.

FinServ Can Help

Why tackle this arduous task alone when industry experts are eager to help? FinServ’s project management and industry expertise can provide value through the various stages of negotiating fallback language. FinServ can lead the implementation of your desired document intelligence solution, construct a comprehensive inventory of your firm’s contracts, and manage the integration of existing infrastructure with your new system.

We can produce a detailed overview of the document intelligence solution, it’s interdependence with various internal and external systems, and design the procedures associated with its use. FinServ understands that proper documentation is essential for mitigating regulatory risks, validating business procedures, and streamlining training.

In today’s increasingly digital, data-centric corporate environment, a strong data governance approach is of utmost importance. Data governance defines who does what in data management. It cannot be solved in one corner of the organization; it requires consistent collaboration between IT and business to manage data as a real asset. A robust data governance program defines who makes the decisions and who is accountable for each data management activity in the company. Defining these roles is necessary to improve data integrity, power key business initiatives, and ensure regulatory compliance.

Companies with unclear or non-existent responsibilities related to their data lack an effective data governance methodology and usually face the following situations:

• Lack of clarity around who is responsible for key data objects and their quality
• Poor data quality (e.g. missing values, outdated information)
• Data management and stewardship activities are performed in an unstructured manner and without proper documentation and controls

These issues can have severe consequences for an asset management firm from the front to back office. For example, poor data quality and lack of responsibility for key data objects can lead to problems in reporting, such as incorrect or missing data items for PnL reporting. Asset managers are in need of enhanced analytics that improve operations. In order to build out a target operating model or other highly scalable platform, asset managers must focus on being a data-first company.

Clearly, there can be substantial functional and tactical obstacles to establishing a data governance framework. However, the benefits and overall payoff are well worth the investment. Especially within the asset management domain, there are several advantages of implementing an effective data governance strategy.

Prepare for Regulatory Scrutiny

The financial services industry has recently faced increasing pressure to comply with new financial data reporting regulations such as AIFMD, Form PF, GDPR, CCAR, and DFAST. Most firms were not adequately prepared; they had to scramble to find the necessary data, map its lineage and usage, and verify its accuracy in order to satisfy these requirements.

Firms learned that a data governance program would alleviate much of the compliance pressure and avoid endless meetings, emails, Excel spreadsheets, and Visio diagrams. The best way to end that cycle of ad hoc documentation, which produces data that nearly instantly becomes stale, is through the use of technology and analytics. Asset managers can benefit from proactively implementing a data governance plan that will be useful when the regulators come knocking.

In addition, there has been increasing regulatory emphasis on data security and protection, including cybersecurity, preventing data leaks. Data governance is the clear solution here for asset managers to prove the reliability of their data to authorities and ensure that they have protected the data against potential breaches.

Consistent Standards for Data Quality, Validity, and Transparency

The process of acquiring data, especially from external, third-party vendors, is an expensive one for asset managers. On top of that, the data may not have been properly validated and therefore presents quality issues. A centralized data governance system can streamline data procurement and validation so the firm can negotiate favorable rates with vendors, mitigate data-related risk, and reduce operational costs of scrubbing the data.

Once the data is within the organization, quality can still be an issue for different users. A data governance program facilitates commitment to firm-wide data quality standards, which increases transparency and trust among business users that the data has been thoroughly validated.

Additionally, business terms and definitions often have an entirely different meaning in one group versus another, which leads to issues in the case of firm-wide initiatives and projects that require multiple teams to collaborate. This is where data governance comes in to help centralize the function and create a set of business definitions (a “data dictionary”) and business usage rules. Having a centralized governance process is very useful when it comes to large-scale data transformations for mitigating risk through increased control and oversight of complex data projects.

Increase the Value of Data

The vast amount of data that is available today can be extremely valuable to asset managers for many purposes, from discovering valuable investment opportunities to gaining insight on potential investors. Implementing data governance contributes to increasing data’s value even further. If it is not used properly, data has little to no value. Governance ensures that any data issues can be quickly resolved, and that data is ready for use in increasing efficiency of business processes as well as decision-making and business models.

Implementing Data Governance

FinServ Consulting specializes in offering a wide variety of business services to asset management firms; we can help define a data governance framework that will realize the benefits discussed and more. FinServ can provide hands-on business analysts to support clients looking to create a specific set of reports of dashboards, those looking to stand-up a formal data governance program, and those looking to implement a more complex master data management system to handle growing complexity of hybrid on-premise and cloud system ecosystems. We are well versed in the established guidelines and proven approach for setting up data governance:

1. Define who does what. Who owns specific data management activities within the organization? Is the function centralized or decentralized?
2. Set mandates and decision-making rights. Set the mandate and decision-making rights for the people defining and monitoring the governance policies and standards.
3. Define an implementation plan. Training, communication and change management activities should be included.
4. Identify resources. Determine how many people are needed and select the right individuals to run data governance.
5. Select technology. Select the appropriate technology solutions to create a best-in-class platform.

Summary

If you are interested in establishing or improving your firm’s data governance platform, FinServ Consulting is the right partner to help you reach your firm’s strategic data objectives. Throughout our 15 years of existence, we have proven that our deep industry knowledge combined with our project management and overall best practice methodologies can be an asset to your organization. To further continue the conversation or to discuss more of FinServ’s capabilities, please contact us at info@finservconsulting.com or give us a call at (646) 603-3799.

Smart contracts are the most disruptive enterprise application of blockchain technologies and will continue to create new efficiencies for the financial services industry. They allow for a reliable and enforceable means of aligning multiple parties across a decentralized platform. When Nick Szabo developed the concept of smart contracts in the early 1990’s, blockchains and the subsequent hype surrounding them did not yet exist. Now, the decentralized and trust-based nature of blockchains give smart contracts the necessary platform for reaching more widespread applications in the business environment.

Smart contracts create previously unrealized efficiencies and new opportunities for many business processes; however, the code heavy nature of the technology has historically been a major barrier-to-entry. This has led to a growing need for a scant number of technical developers that not only understand the intricacies of building sophisticated blockchain networks, but also have a deep fundamental understanding of the end user’s business needs. That knowledge scarcity seemed to be the leading factor consistently restraining the enterprise potential of smart contracts. However, Salesforce blockchain eliminates the dependency on building blockchains from lines of code. Instead, users may use the same intuitive drag and drop interface from the world’s leading CRM platform: Salesforce. Smart contracts on the Salesforce blockchain, replace the resource intensive development cycles of other blockchain solutions with easy to use functionality.

What is a “Smart Contract” Anyway?

Smart contracts are self-verifiable, self-executable, and tamper proof contracts that exist digitally. At their core, smart contracts are computer programs collectively developed and agreed upon by two or more. This computer code verifies, executes, and enforces the terms of the contract if / when they are met. While this intermediary verification and enforcement role has often been reserved for an individual or institution, smart contracts are a way to remove the resource intensive and error prone third party from the equation. Instead, a secure and trusted decentralized blockchain takes their place as the intermediator that verifies and enforces the agreement both parties previously determined.

Advantages of Smart Contracts on Salesforce Blockchain:

1. Start by defining the trust network, its rules, and permissions. Blockchains are an effective means of uniting participants from different entities under a single network. However, not all of the participants necessarily need the same access to data in the network or the permission to modify that data in the same way. Salesforce blockchains are permissioned, meaning that the network agrees on what sort of information each network participant may view, as well as if / how they are able to modify that information.​

2. Create a low-code data model directly on blockchain. Many of the same fields that would be necessary terms of the smart contract are already common objects and fields within Salesforce. Creating a smart contract and filling in these crucial pieces of information is just as straight forward and foolproof as working through other standard processes in Salesforce.

3. Make blockchain data actionable. Because Salesforce Blockchain is directly linked with the Salesforce Lightning platform, smart contract terms can easily be linked to Salesforce platform events, opportunities, and more to directly reflect the outcomes of the smart contract within the Salesforce environment. No need to go back to Salesforce and manually update the platform based upon the predetermined conditions of the smart contract. This is built into the contract!

4. Easily create apps for all partners and invite them. Entities that are already Salesforce customers have direct insight into the information shared with other participants on the Salesforce blockchain network. Entities that are not Salesforce customers can utilize Heroku or any custom framework to have the same blockchain data be available outside of Salesforce as well. This allows all firms to participate in the efficiency gains of blockchain technology without having to be a Salesforce customer themselves.

Smart Contracts & Derivatives

As with traditional contracts, smart contracts are used when multiple parties need to enforce all participants to adhere to a set of terms. Most often, there are circumstances surrounding these terms that require the participating entities to independently verify each other’s work. Smart contracts are appropriate when:

• More than one entity requires access to the blockchain ledger
• There are potential misalignment issues as to who controls the data
• There is a need for robust data integrity protections and a tamper proof auditable trail for all changes to the data

Smart contracts can be used to create efficiencies in post trade processes by removing the duplicative efforts of each counterparty independently verifying and executing trades. They enable a standardized and predetermined set of terms to create efficiencies in the post-trade processing of over-the-counter derivatives. Smart contracts also enable real-time valuation of positions, allowing for more transparent monitoring and reductions of costly errors. Following the predetermined business rules and terms of trade set by both parties, smart contracts streamline the reconciliation process as well. Salesforce blockchain’s functionality means digitally building secure and executable contracts for sophisticated business processes is an intuitive and efficient way of building enforceable agreements.

Future of Smart Contracts

Smart contracts built on Salesforce Blockchain are poised to disrupt the role intermediaries play across several industries. Individuals are able to manage their digital identity by only enabling the necessary details of their personal identity to be viewed by the required entities. Supply chains are more easily auditable for all parties involved at each stage, allowing for more effective planning and real time insights. Rather than having to wait for an intermediary to update subsequent lines of the supply chain, all participants have a clear understanding of everyone else’s current status. Loan processing and verification will shift from disjointed paper-based forms for verification by an intermediary to easily fillable drop down menus. Transfers of funds or knowledge today that require an intermediary verifying all participating entities can be replaced by the secure, verifiable, and self-executing smart contract on the blockchain.

Summary

Smart contracts on the Salesforce blockchain will revolutionize several business processes relevant to the financial services industry. FinServ has been considering the efficiency gains associated with Salesforce blockchain as well as the usability and process flows of working in the system. As a Salesforce Consulting Partner, FinServ will be joining several other leaders from their respective industries in testing and vetting the Salesforce blockchain platform to ensure that it meets the sophisticated needs of our customers. We are excited to see what benefits Salesforce blockchain and its ability to easily develop smart contracts will soon bring to the financial services industry. If you would like to learn more about the Salesforce blockchain network or other FinServ capabilities, please reach out to us at info@finservconsulting.com or give us a call (646) 603-3799.

Hiking up any formidable summit requires experience, expert guidance, and determination to succeed. Navigating a Black Mountain implementation is no different. It can be a challenging and complex experience for asset managers that are not prepared to embark on the journey.

What is Black Mountain?

Black Mountain is a best-in-class, industry-standard provider of highly configurable front- and middle-office software solutions for investment managers. Part of newly formed Allvue Systems, owned by Vista Equity Partners, Black Mountain is an innovative suite of solutions for portfolio management, trading, credit research, and direct lending. Investment firms utilize Black Mountain to streamline critical business processes that are at the heart of all front- and middle- office activities.

• Research Management: Integrates deal pipeline, analyst commentary, and ongoing coverage with trading activity and portfolio exposures. Includes the ability to push Excel-based financial templates into Black Mountain for aggregate research analytics.
• Trade Order Management: Streamlines order entry with broad asset class coverage including loans, bonds, municipal securities, equity, CDS, ABS, MBS, futures/options, swaps, repos, FX, and real estate. Easily accommodates data input controls, alerts, and custom portfolio allocation methodologies.
• Portfolio Management: Dynamic dashboards, charts, and analytics are tied to trading activity for all supported asset classes. Additionally, 3rd party data sets can be incorporated into the system to provide robust reporting capabilities to meet changing company, market, and regulatory needs.
• Compliance Management: Supports pre- and post-trade portfolio compliance via a powerful and robust compliance calculation engine.
• Data Warehouse: Facilitates historical data capture and reporting requirements. Enterprise data management tools can be leveraged in the system to define data priority, conflict resolution, and alert users using rule-based data gap checks.

Source: Black Mountain Systems

What to Know Before Getting Started with a New Black Mountain Implementation

• Get Help Early: Don’t assume that you only need help after a Black Mountain contract is signed and the implementation officially begins. There is valuable preparation work that can and should begin well ahead of any Black Mountain implementation. The clearer current and desired future state are defined (and documented) before involving the Allvue implementation team will only improve the quality of overall system design, reduce the risk of misinterpretation, and will save time/budget in the long-run.
• Don’t Rush the Scoping Process: In a similar theme, resist the urge to “just get the implementation started”. Black Mountain implementations start with a handful of scoping sessions/workshops to formally outline the core project scope, assumptions, and risks in the form of a Scope Document. While additional requirements gathering will take place in an agile fashion throughout the project, the initial Scope Document will govern your initial project budget. It is easy to misinterpret what you are getting if you are not familiar with Black Mountain and it is important to manage expectations on all sides.
• Out-of-the-Box Solutions Still Need Initial Configuration: Every Black Mountain client is different. Even though Black Mountain has a treasure trove of standard, out-of-the-box features and functions, much of it still requires configuration before being usable in a production environment.
• You Need to Understand Your Data: Garbage in really is garbage out. Not only does data need to be clean before being consumed by Black Mountain, but you need to be proactive about how to resolve data conflicts. This includes understanding data origination, priority, and downstream reporting dependencies. If the same field can come from multiple sources, which source should be used and in what scenarios? Do you need an additional Security Master solution on top of your Black Mountain implementation?
• The More You Know, the More You Will Want: As your team gets more familiar with the power of the Black Mountain platform, get ready for new ideas and user requests. Setting aside a reasonable budget to handle new requests will help you address these requests and improve user satisfaction/adoption.
• Aim to Leverage 3rd Party BI Tools for Reporting: Consider leveraging 3RD party BI tools like Microsoft Power BI or Tableau via Black Mountain APIs in order to self-service a larger portion of your dashboard/reporting needs via direct systematic access to your data stored in Black Mountain.

How FinServ Can Help

• Ability to Bridge the Gap: The FinServ team is made up of talented consultants that possess both a deep level of industry knowledge and technical expertise. Coupled with the team’s Black Mountain platform knowledge, FinServ is able to help clients bridge the knowledge gap with the Allvue implementation team to streamline the implementation process by calling out potential design limitations and clearly articulating complex requirements using cross-functional workflows, UI/UX wireframes, and by creating detailed end-user documentation.
• Project/Program Management: FinServ provides best-in-class project management staff that are experts in managing scope change requests, issue logs, preparing executive level presentations, and detailed weekly status reports. These activities together ensure that all levels of the client organization are kept up-to-date on the most critical aspects of the project progress and that issues are escalated proactively.
• Business Analysis, Data Analysis, and Documentation: FinServ skilled business analysts can support clients by providing hands-on project delivery activities like documenting requirements, performing data mapping, testing, and creating formal system documentation that otherwise would take you away from your day job.
• Full-time, Onsite Consultants with White Glove Service: FinServ can provide full-time, onsite consultants to support a Black Mountain implementation. This level of support ensures that any issues that arise are immediately reviewed and often resolved immediately. For any issues that cannot be resolved immediately, detailed resolution requirements are documented and provided to the vendor for immediate remediation, testing, and verification back out to the user.

The Bottom Line

Black Mountain is a robust, powerful platform for investment managers, but getting started with a Black Mountain implementation can be a daunting task if you don’t prepare ahead and don’t have the right adviser supporting you on your journey. FinServ Consulting’s Black Mountain expertise and unparalleled track record of service for asset management clients makes us the right partner for any Black Mountain project.

To learn more about FinServ Consulting’s services, please contact us at info@finservconsulting.com or (646) 603-3799.