Asset servicers broaden offerings as part of acquisition trend
21 December 2018 Copenhagen
Image: Shutterstock
The acquisition trend in the investment management software vendor space gathers pace and widens to include asset servicers broadening the scope of their offerings, according to Klaus Holse, CEO, SimCorp.
In a blog post, Holse explained that as a result of this growing demand from existing and potential clients, some investment management software vendors and asset servicers are looking to stay competitive by filling technology gaps in their existing offerings.
He suggested that this can be done in two ways: by innovating and developing your own software and services or by strategic acquisitions of gap-filling technology from other companies.
Holse said: “The latter looks to be the most popular way to go, and we should expect other software vendors and asset servicers pursuing the same strategy in their attempt to achieve full front-to-back offerings over the coming years.”
However, he explained that a number of challenges come with filling functionality gaps through acquisitions, for example, the challenge of integrating an acquired product into your existing offering, often already being a mix of many solutions.
Holse noted that integration can be time-consuming, delaying the time to market, and increased risk, due to data reconciliation between new and existing systems—all to the detriment of the buy-side clients relying on the offering acquired.
He said: “As most recent acquisitions have been front-office-related, the data issue is especially important here, as reliable, real-time data is the foundation of a successful front office.”
Holse explained that a common concern by many in the industry is the realisation that there’s a big difference between developing a single system covering the all of the front-to-back investment management operations and using acquisitions to build a system comprised of multiple applications covering a front-to-back scope.
He concluded: “And even if the intention really is to integrate it into one front-to-back system, this will be a paramount investment— an investment which is likely to prevent any vendor from developing other new functionality in the meantime—and a quest we remain to see a vendor succeed with.”
In a blog post, Holse explained that as a result of this growing demand from existing and potential clients, some investment management software vendors and asset servicers are looking to stay competitive by filling technology gaps in their existing offerings.
He suggested that this can be done in two ways: by innovating and developing your own software and services or by strategic acquisitions of gap-filling technology from other companies.
Holse said: “The latter looks to be the most popular way to go, and we should expect other software vendors and asset servicers pursuing the same strategy in their attempt to achieve full front-to-back offerings over the coming years.”
However, he explained that a number of challenges come with filling functionality gaps through acquisitions, for example, the challenge of integrating an acquired product into your existing offering, often already being a mix of many solutions.
Holse noted that integration can be time-consuming, delaying the time to market, and increased risk, due to data reconciliation between new and existing systems—all to the detriment of the buy-side clients relying on the offering acquired.
He said: “As most recent acquisitions have been front-office-related, the data issue is especially important here, as reliable, real-time data is the foundation of a successful front office.”
Holse explained that a common concern by many in the industry is the realisation that there’s a big difference between developing a single system covering the all of the front-to-back investment management operations and using acquisitions to build a system comprised of multiple applications covering a front-to-back scope.
He concluded: “And even if the intention really is to integrate it into one front-to-back system, this will be a paramount investment— an investment which is likely to prevent any vendor from developing other new functionality in the meantime—and a quest we remain to see a vendor succeed with.”
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